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Market Performance Under Biden: A Closer Look

Friday saw a notable uptick in stock prices, marking the end of a robust market trajectory under President Joe Biden. As the S&P 500 climbed by 1%, it underscored a remarkable 58% increase since Biden took office on January 20, 2021. However, this performance is still eclipsed by the market’s almost 70% rise during Donald Trump’s initial term and the over 80% surge witnessed in Barack Obama’s first term, which followed the economic downturn associated with the Great Recession.

Biden’s presidency coincided with a recovery phase as the stock market was rebounding from the lows experienced during the COVID-19 pandemic. Factors such as government stimulus checks, a surge in retail investor participation, and the impressive profitability of major technology firms significantly contributed to this rally. Nevertheless, this upward momentum faced challenges as supply chain issues, escalating oil prices, and high liquidity drove inflation to its highest levels in decades. The Federal Reserve’s subsequent swift interest rate hikes pushed stocks into a bear market, resulting in a substantial decline in the S&P 500’s value.

Despite these challenges, the technology sector rebounded following the advent of AI advancements, notably after the launch of ChatGPT in late 2022. This technological innovation has spurred renewed investor interest and driven stock prices to new heights.

Dow Jones Performance in Perspective

Similar trends were observed in the Dow Jones Industrial Average during Biden’s presidency, although its performance still lagged behind both Trump’s first term and Obama’s two terms. Under Trump, the Dow rose by more than 56%, compared to an impressive almost 150% increase during Obama’s presidency. In contrast, Biden’s tenure has proven more favorable for Wall Street than the eight years under George W. Bush, a period marked by significant losses.

When assessing Biden’s performance on an annualized basis, it falls slightly below the 50-year market average but surpasses the averages of several 20th and 21st-century Democratic presidents. However, when compared to one-term presidents, the Dow’s performance during Biden’s time is the least favorable since Jimmy Carter’s administration.

The Presidential Influence on Markets

It is essential to recognize that a president’s influence on the stock market is somewhat limited. While presidential remarks can impact market sentiment, and policies may favor or disadvantage particular sectors, the primary drivers of stock market trends are largely the overarching dynamics of the national and global economies. The effects of a president’s policies may typically only become apparent once they have left office, illustrating the complexities of attributing market movements directly to presidential actions.

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