President Trump has been very focused on how the stock markets have performed during his Presidency and they are one key way he views his success as a President. He has tweeted about it at least 128 times during his three plus years in office per trumptwitterarchive.com. On February 19 he tweeted about the stock market hitting a record, which is correct.
On Monday, February 24, Trump tweeted that the, “Stock Market starting to look very good to me!” after it had fallen 1,387 points since his February 19 tweet.
Unfortunately for Trump, his forecast was not very good as the market continued its rapid descent. The next day the Dow fell 879 points and over the next four days it dropped 2,551 points or over 9%, to close at 25,409.
Almost exactly two years ago on February 27, 2018, the Dow 30 Industrials closed at 25,410, which means all the Dow gains of the past two years have been wiped out in just over two weeks and the market has incurred the fastest 10% plus decrease in history.
What start date should be used for this analysis?
When to start Trump’s and Obama’s stock market return analysis is worthy of a bit of discussion. The first two charts below start with their respective January 20 inauguration dates, which is the official day that a President takes the Oath of Office. However, no President can’t implement any policies on that day which impact the economy.
On the flip side the markets are forward looking so it is reasonable to assume that the markets can react when the President is elected in early November.
The last point is that when the economy is undergoing tremendous disruption, such as when Obama was elected during the Great Recession, no President can keep the stock markets from declining on a short-term basis.
Trump’s stock market returns vs. Obama’s
The four charts below show the gains for the Dow 30 Industrials that Trump tends to tweet and talk about and the S&P 500, which provides a broader view of the stock market.
The first two start with inauguration dates. Since their respective inaugurations the Dow is up 28% under Trump and over the same timeframe it was up 62% under Obama. These figures are based on Thursday’s close before the Dow fell an additional 1.4%.
For the first three plus years since Trump’s inauguration the S&P 500 has risen 30% while under Obama it increased 70%.
The second set of charts start the analysis based on election dates and for Obama also from the low point of the stock market. The Dow has risen 39% since Trump’s election, while under Obama it increased 35% and 65% from the low point in February 2009.
Note that in the last 16 minutes of trading on Friday the Dow increased 643 points. If it had closed at that value Trump’s gain would have been 35%, matching Obama’s vs. being ahead by 4 percentage points.
The Dow is in an extremely oversold position with its RSI, or Relative Strength Index, in the upper portion of the chart at 17.26. The Dow is due for a bounce but another technical indicator of it breaking below its 50, 100 and 200 day moving averages shows that there could be further downside.
The S&P 500 has risen 38% under Trump since his election, while under Obama it rose 36% and 103% from the low point in March 2009. The S&P 500 is also oversold with an RSI of 38.86 but not nearly as much as the Dow. It also closed above its 100 day moving average, so from a technical perspective is not as “broken” as the Dow.
Powered by WPeMatico