Unlike his predecessor, President Biden has been quiet on stock market performance in his first 100 days. While it may be tempting to boast, he is right to be cautious.
- The stock market has zipped ahead during President Biden’s first 100 days
- Biden has had a number of important tailwinds, including the vaccine success and a booming economy
- In the end, fundamentals, valuations, and technicals drive long-term equity returns
While in office, Donald Trump took stock market success as a ringing endorsement of his leadership. In the first 18 months of his presidency, he tweeted about stocks more than 60 times, mentioning stock market performance more often than any of his predecessors.
President Biden has been notably quieter, perhaps recognising that boasting about the caprices of the stock market would leave him as a hostage to fortune. Nevertheless, the stock market’s record in his first 100 days leaves him the 3rd most successful president of all time after Franklin Roosevelt and William Taft. Trump could only manage 7th.
Biden celebrated 100 days in office on 29th April. Since then, the stock market is up 9.9%, compared to 6.1% for Trump and 75.1% for Roosevelt. Looking at returns from election day to the end of April puts Biden at the top of the list for all time. The stock market has generally done better under Democrats than Republicans – 10.3% higher on average for the blues and 0.2% lower for the reds.
To be fair, Biden has had some unique advantages. The vaccine rollout has proceeded successfully, hitting his target of 200m doses. The economy has been flying, helped by the huge $2 trillion stimulus package the new President has pushed through Congress. Add in the relief rally as the election was finally decided and it was a recipe for success.
The group that compiled the data, LPL Research, cautions against making any significant conclusions about how stocks will do during the rest of Biden’s time in office: “President Eisenhower had a weak first 100 days, then a big rally over the remainder of his time in office. Conversely, President Taft saw a big rally during the first 100 days, only to have negative returns for the remainder of his time in office. In the end, fundamentals, valuations, and technicals drive long-term equity returns. The good news is only once since the Great Depression did that mean lower returns for the remainder of time in office after the first 100 days.”
US markets are celebrating after a bumper results season that saw the majority of companies beat expectations. However, valuations are high and it may be that optimism is at a peak. Joe Biden is perhaps smart not to brag about stock market performance just yet.
