Posted by lplresearch
Friday, January 21, 2022
President Biden took over the Oval Office a year ago yesterday, on January 20, 2021. So how did things go for the stock market? Let’s dive into it.
“The Dow gained 12.3% the first year under President Biden, which is right about the average first year return of 12.1%,” explained LPL Financial Chief Market Strategist Ryan Detrick. “But where things really stand out is how many new highs were made, with a very impressive 43 new highs, the third most ever.”
As we share in the LPL Chart of the Day, the Dow gained 12.3% during his first year in office, which ranks 9th out of all the first years for all Presidents since 1900.
Breaking it down a little more, stocks historically have done much better under a Democrat that first year than under a Republican, although that 91% gain under FDR had a lot to do with that. Still, stocks rose more than 30% during both President Obama’s and President Trump’s first years, breaking with the historical trend.
And of course, let’s not forget that stocks did amazingly well right after President Biden won the election in November 2020, so you could say some of those gains were pulled forward perhaps. Here’s a chart we shared a year ago on this. It was the best Election Day to Inauguration Day return ever.
Lastly, the stock market’s gain during President Biden’s first 100 days in office was one of the best ever.
All in all, the economy and stocks did quite well the first year under President Biden. Given this is a midterm year and emotions will run high, we want to remind investors to separate your politics from your investments. Many people have not liked past Presidents, only to miss out on big gains. A strong economy (and we expect it to be this year) matters a lot more to your investments than the makeup of Congress or who is in the White House.
For more on midterm years and why this year could be quite volatile, please watch the latest LPL Market Signals podcast with Jeff Buchbinder and Ryan Detrick, as they break it all down.
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All index and market data from FactSet and MarketWatch.
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