- President Donald Trump has long said that he’s boosted the stock market.
- Historical returns of the S&P 500 show the market has gained an annualized 10.5% under Trump, outperforming the long-time average of 7.6%.
- Visit MarketsInsider.com for more stories.
“You mean the Stock Market hit an all-time record high today and they’re actually talking impeachment!? President Donald Trump tweeted in April.“Will I ever be given credit for anything by the Fake News Media or Radical Liberal Dems?
Stocks surged in the aftermath of the 2016 election and the S&P 500 returned nearly 20% in 2017 as traders priced in the tax cut and deregulation promises that Trump made on the campaign trail. The boost became known as the “Trump bump.”
The S&P 500 has gained 28% since November 2016, good for an annualized gain of 10.2%. That is solidly above the 7.6% average annual return since 1950.
To be sure, other presidents have also seen strong annualized stock-market returns during their time in office. Most recently, Presidents George H.W. Bush (+11.2%), Bill Clinton (+16.5%), and Barack Obama (+9.9%) all saw S&P 500 returns under their watch that beat the long-time average. George W. Bush (-4.3%) wasn’t as fortunate as the onset of the Great Recession occurred under his leadership.
Going into the 2020 election, the stock market’s performance will be even more important for Trump, who wants to keep both Wall Street and Main Street on his side. Especially because he likes to use the market as a scorecard for his performance.
“You live by the sword, you die by the sword, to a certain extent,” Trump told the Associated Press in April 2017 when asked if he still used the stock market as a scorecard for his performance.
But Trump’s positive impact on markets may be coming to an end. The S&P 500 fell 6% in May and has been relatively flat since January 2018. And some market watchers are warning that it will fall further.
The recent threat of tariffs on all Mexican imports, coupled with the escalating trade war with China and signs of a weakening US economy, could lead to a “Trump slump,” according to Ed Yardeni, the chief investment strategist of Yardeni Research.
And John Higgins, chief markets economist at Capital Economics, forecasts the S&P 500 will decline another 17% through the end of the year. “Admittedly, we aren’t explicitly forecasting another recession, just a significant economic slowdown,” Higgins wrote on June 3.
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