President Donald Trump
Kevin Lamarque | Reuters
President Donald Trump may be livid about this week’s market sell-off, but the rally in U.S. equities since his election is still well intact.
The Dow Jones Industrial Average is up 47.7% since Trump’s election through Tuesday’s close, which brought the index’s week-to-date point loss to more than 1,900 points, more than 6.5%. Adding in Wednesday’s partial rebound, the Dow is up 49.9% since the market’s close on Nov. 8, 2016.
At a recent record high, the Dow’s performance since Trump’s election exceeded 60% before falling more than 10 percentage points amid the sell-off. These calculations measure the percent price change of the Dow over a given period and exclude fixed returns like dividends.
Still, the near-50% gain since his election may come as a relief to the president, who was reportedly irate that the stock market had plunged amid growing concerns over the virulent coronavirus and its potential impact on the global economy.
The president has warned aides against forecasting the effects of the virus due to his concerns that it might rattle stocks further, The Washington Post said.
The Post’s report came even after the president’s top economic advisor, Larry Kudlow, said that coronavirus is likely a one-time and transient event and, as such, has created a buying opportunity for long-term investors. “The virus story is not going to last forever,” Kudlow said Tuesday on CNBC’s “The Exchange.”
If the last two days are any reflection of what’s in store for the Trump administration going forward, however, both the White House and investors could be facing an unusually lackluster year to round out the president’s first term.
Bespoke research shows year four in a president’s term is usually decent. The firm looked at equity performance during the final year of each president’s term going back through the 1930s and found that “on a median basis, the second two years [of an American presidency] have been considerably better than the first half.”
“The S&P 500’s median gain of 17.27% in year three has clearly been the best of the four years, but year four hasn’t been too shabby either,” wrote a Bespoke team led by Paul Hickey. “In the 22 prior four year cycles, the S&P 500’s median gain was 9.26% with positive returns nearly three quarters of the time,” he added.
Despite claims that he does not pay attention to day-by-day market moves, Trump has not been afraid to tweet or talk about stocks on days with sharp gains, which some see as a risky prospect since equities don’t always rise like George W. Bush saw during his administration.
He did so earlier this month, when the U.S. stock market hit all-time highs.
“New Stock Market RECORD. Congratulations, spend your money wisely. KEEP AMERICA GREAT!!!!!”
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