Biden’s Presidential Term Ends on a High Note for U.S. Stocks
As Joe Biden prepares to leave the White House, the U.S. stock market is celebrating a remarkable run. Since he took office on January 20, 2021, the S&P 500 has surged over 55%, while the Dow Jones Industrial Average has advanced more than 39%, and the tech-heavy Nasdaq Composite has jumped nearly 46%.
A Mixed Bag: Stock Market Performance Under Biden
While the major stock averages have posted impressive gains, they have also experienced their worst returns since the second term of George W. Bush between 2005 and 2009, and the smallest gains since Barack Obama’s second term between 2013 and 2017.
Recovery from Pandemic and Economic Downturn
Biden’s presidential term began with an escalation of the COVID-19 pandemic and an economic downturn. However, the major stock averages still managed to post double-digit returns by the end of 2021, as the global economy began its recovery from the pandemic, and the Federal Reserve maintained supportive monetary-policy measures.
Tech-Fueled Earnings Recovery and AI Frenzy
In 2023 and 2024, a tech-fueled earnings recovery and the artificial-intelligence frenzy propelled U.S. stocks to historic levels. The S&P 500 scored back-to-back double-digit annual gains by the end of 2024, and is now kicking off its third year in a bull market.
Expert Insights: Cyclical Sectors and AI
David Russell, global head of market strategy at TradeStation, notes that there was an “explosive surge” in cyclical sectors of the economy that benefited from the reopening after the pandemic and the Biden administration’s landmark Inflation Reduction Act in 2022. He also attributes the market’s performance to the artificial-intelligence frenzy, which had been building for years before coming to fruition in the early part of 2023.
Looking Ahead: Trump’s Return to the White House
As President-elect Donald Trump prepares to take office, investors are hoping for further economic growth and corporate America’s strengthening. However, some of his economic plans could lead to a rising fiscal deficit and a resurgence of inflation, which may harm the government-debt market and send interest rates higher again.
Stock Market Rally: Will it Continue?
Despite the uncertainty, experts believe that the stock market could break out of its current period of consolidation soon. With double-digit earnings growth expected, a dovish Federal Reserve, and the new president’s executive orders on deregulations, investors may feel encouraged to get more involved in the market again.
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