For stock performance under
Trump, don't look to prior transitions
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[January 20, 2017]
By Lewis Krauskopf and Chuck Mikolajczak
YORK (Reuters) - As he is sworn in as the 45th U.S. president on Friday,
Donald Trump will mark one of the best performances for the American
stock market for any presidential transition period of the modern era.
But the market's 5.8 percent rise since his Nov. 8 election may not
portend much for stocks once the Republican takes office. For guidance,
investors need only recall the oscillations under the outgoing
Democratic President Barack Obama's transition period, which came amid
the throes of the 2008 financial crisis, also overlapped a 15.5 percent
fall for the S&P 500 <.SPX> from his election to the day of his
inauguration. That swoon - which was as much as 25.2 percent at one
point - is by far the worst performance for U.S. equities during a
Since then, Obama has presided over the second-best run for the stock
market under any president since Republican Dwight Eisenhower, with the
benchmark S&P rising nearly 170 percent while he was U.S. leader from
1953 to 1960.
Democratic President John Kennedy, meanwhile, had the best transition
period for stocks, which rose 8.5 percent between his November 1960
election and January 1961 inauguration. After that, the market rose a
paltry 19.8 percent during his administration, which was cut short by
his assassination on Nov. 22, 1963.
"People put a lot of weight into what they said on the campaign trail,
as if they are going to get these things through exactly as they said or
even propose them exactly as they said," said JJ Kinahan, chief market
strategist at TD Ameritrade in Chicago.
"The reality of the office is people forget it is politics Ė politics is
all about making a deal."
Stocks tend to rise regardless of which party holds power. Two
exceptions were both Republicans: Stocks fell 20.1 percent under Richard
Nixon and 36.7 percent under George W. Bush.
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An electoral poster of Donald Trump is displayed on the floor of the
New York Stock Exchange (NYSE) the morning after the U.S.
presidential election in New York City, U.S., November 9, 2016.
had the most days with the stock market trading below where it closed on his
inauguration day: 1,608 days, or almost 80 percent of his presidency.
Democratic President Lyndon Johnson's tenure tells a rosier story for equities
investors. The stock market traded higher than it closed on Johnson's 1963
inauguration for every day he was in office, 1,346 days in all.
market's best performance during a president since the Eisenhower administration
came under Democrat Bill Clinton, with stocks soaring nearly 210 percent.
Action in the options market on Wednesday indicated investors were exercising
caution ahead of Trump's inauguration, with a massive trade in SPDR S&P 500 ETF
Presidents "only have so much power, and if (Trump) canít get Congress, even
though it is all one party, if they canít agree on what it is they want to push
through, it is going to be very, very difficult," said Kinahan.
(For a graphic on how U.S. stocks have fared under presidents since Eisenhower,
(Additional reporting by Saqib Ahmed; Editing by Dan Burns and Jonathan Oatis)
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