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Stock Market Performance By U.S. President: Which Party Gets Better Returns?

The stock market performance under Donald Trump was strong. But history says investors favor a Democrat in the White House.

White House Washington

Some investors dreaded what a Joe Biden win would mean for the stock market, but those worries were somewhat unfounded as the S&P has returned 34% since his inauguration despite the ongoing inflation fight, the commensurate Fed activity and the Russian invasion. Contrary to popular belief, stock market performance is better under Democratic presidents than Republican ones. In fact, it’s not close.

According to Liberum, a U.K.-based investment bank, since 1947 the average annual return under Democratic presidents is 10.8%, versus a mere 5.6% return under Republican presidents.

The best stock market performance by a president in the post-World War II era came under Bill Clinton; the S&P 500 was up a whopping 210% in his two-term presidency, from 1993-2001. The second-best return under a U.S. president? That would be Barack Obama’s eight-year tenure when the S&P was up 189% from 2009-2017.

Next up are a pair of Republican presidents: stocks rose 129% under Dwight Eisenhower (1953-1961) and 117% under Ronald Reagan (1981-1989).

Rounding out the top five is Democrat Harry S. Truman, who saw the S&P rise 87% during his eight-year term (1945-1953).


Trump’s Stock Market Performance

How did Donald Trump fare in his four years in office? Pretty well, especially considering what happened in 2020.

The S&P 500 was up 63% during Trump’s tenure. That works out to about a 1.3% per-month return, or a 126% return if he had won re-election and served two terms. That would place him fourth on this post-World War II list, just ahead of Ronald Reagan.

Of course, context matters when it comes to U.S. presidencies.

It’s important to note that Obama took office just as stocks were hitting multi-year lows on the heels of the worst recession since the aforementioned Great Depression. Obama benefited from the bounce-back—though, you could argue that he was largely responsible for facilitating it.

On the flip side, President Trump had the bad fortune of being in office when the worst global pandemic in more than a century forced Americans to stay home almost an entire year and the economy to plunge. One can debate how his handling of Covid-19 impacted the economy and by extension the stock market (I’m not touching that one). But the coronavirus would have been bad news for any president, at least for a time.

Biden is certainly benefitting from global post-Covid reopening trends and a resilient U.S. consumer. That could mean a post-recession bump (or even a recession-free “no landing” scenario) for Joe Biden similar to the one he and President Obama enjoyed 12 years ago.

And that’s really the point. Stock market rallies can last for generations, cross aisles, and survive times of terrible political turmoil like we have now. Though Wall Street historically prefers a Democrat in office, there has been many a bull market on the watches of Republican presidents.

So, while it’s fair to have celebrated the impressive stock market performance under Trump, you shouldn’t fear any sort of lingering market correction under Biden—or at least not one that has to do with a Democrat being back in office.

What do you think? Does the presidency truly impact the stock market?


*This post is periodically updated to reflect market conditions.

Chris Preston is Cabot Wealth Network’s Vice President of Content and Chief Analyst of Cabot Stock of the Week and Cabot Value Investor .