Trump's Bull Market Performance: Impressive But Not Unmatched
During President Trump's first 500 days, stock market gains trailed behind those of five other U.S. presidents.
While the stock market experienced notable growth in President Donald Trump's initial 500 days in office, ending Monday, these gains fall short of being historically extraordinary. Despite this, President Trump frequently uses emphatic language, exemplified by his January 14 tweet claiming credit for the "most explosive Stock Market rally in modern history," as reported by Reuters. Employing one of his signature terms, he describes the market's growth during his first 14 months as "tremendous." From Election Day on November 8, 2016, to the record high closing on January 26, 2018, the S&P 500 Index (SPX) surged approximately 34%, largely fueled by investor enthusiasm for Trump's pro-business policies.
However, the momentum slowed as the S&P 500 experienced a 10% correction from late January to early February. Concerns over tariffs and trade disputes initiated by Trump contributed to this downturn, and as of June 5, the index remained about 4% below its January 26 peak.
^SPX data provided by YCharts
Comparing Trump’s Market Gains
Reviewing the first 500 days in office for the last 20 U.S. presidents since 1900, LPL Financial analyzed Dow Jones Industrial Average (DJIA) performance. Trump ranks sixth, narrowly trailing others:
Source: LPL Financial
Trump leads in setting 82 new Dow record highs during his first 500 days, surpassing Johnson with 75 and Clinton with 46. Notably, Roosevelt assumed office during the Great Depression, and Obama’s initial term followed the 2008 Financial Crisis.
A Blend of Market Influences
Trump’s economic policies present a mix of bullish and bearish impacts on the stock market. The bullish effects dominated through 2017 and early 2018, driving stock prices upward.
Source: Investopedia
Since the market peak on January 26, Trump has emphasized trade agenda elements, including tariffs on steel, imports from China, and renegotiation of NAFTA with Mexico and Canada. These measures risk elevating production costs for U.S. businesses, disrupting global supply chains, increasing consumer prices, and slowing economic growth domestically and globally.
Source: Investopedia
As these bearish policies have gained prominence, investor confidence has waned, resulting in subdued stock performance.
Market Outlook
The trajectory of the stock market under Trump hinges on consistent GDP and employment growth. Should the economy and inflation overheat, the Federal Reserve is expected to raise interest rates to cool down growth, likely suppressing stock prices. Conversely, if Trump continues pursuing protectionist trade policies that hamper economic expansion, this would also negatively affect the market.
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