During the homestretch of the tight presidential race, the campaigns of Democratic nominee Kamala Harris and Republican rival Donald Trump are likely to offer up hyperbole about each candidate’s track record on economic issues. So what does the market itself say?
The S&P 500 SPX 0.61%, as of Thursday’s close, has gained 50% since President Joe Biden and Harris, his vice president, were inaugurated on Jan. 20, 2021.
It’s a sizable rise over about 3¾ years, especially given that the equity benchmark lost ground in 2022, tumbling 19% during that year, when it was hurt by the Federal Reserve’s push to raise interest rates in order to fight inflation.
It’s also slightly less than the S&P 500’s advance of 53% at the same stage in Trump’s term, as shown in the table below. Trump’s last year in office was marked by stocks diving as uncertainty related to the COVID-19 pandemic took hold, but the S&P was back at new highs by August 2020.
Data shown is as of Thursday’s market close.Photo: Dow Jones Market Data
How should investors think about these track records?
“My overall take is that the stock market can do well regardless of who’s president, and I hope that we can move away from a view that the market’s performance is kind of dictated by who’s sitting in the White House,” said Ed Mills, managing director and Washington policy analyst at Raymond James.
Mills stressed that who is in the White House and which party controls Congress are factors in how the market
DJIA
COMP
fares, but that there are many other factors, as well. At the same time, he said, a major driver during the two most recent administrations has been heavy spending. He told MarketWatch: “Since the beginning of COVID, the federal government has approved about $8 trillion more than we normally spend, and it was consistent between both the Trump and the Biden presidencies, and so to me, that’s the reason why the market’s up.”
In addition, Mills said a Harris presidency would be viewed by the market as probably continuing the status quo, but it would depend on the extent to which she ends up sticking with Biden’s stances.
With less than four weeks until Election Day, Trump has an overall advantage of 0.4 percentage point in swing-state polls, according to a RealClearPolitics moving average of such surveys as of Friday.
