Trump’s Stock Market Returns Fall Behind Obama’s As The Dow Enters Bear Territory

The stock market continues its roller coaster ride, mainly to the downside, on Wednesday. Over the past 19 trading sessions the Dow has fallen on 15 of them.

Since the Dow’s all-time closing high of 29,551 on Wednesday, February 12, it has fallen 5,998 points or 20.3% to 23,553, which “officially” ends the bull market. While the S&P 500 hasn’t officially entered Bear market territory, it is down 19% from its all-time high of 3,386 on February, 19.

President Trump addressed the nation last night and the stock market does not seem to be impressed. The Dow was down 3 points soon after the market closed on Wednesday, fell 154 points 10 minutes before President Trump spoke, dropped over 500 points or 2.1% just after he finished his speech to the nation and had fallen over 1,100 points an hour after. It appears that the markets could have another significant leg down on Thursday and that the S&P 500 will enter Bear territory.

Both the Dow and S&P 500 have lost over half of their gain under Trump. The Dow has fallen from being up 61% to up 28%, while the S&P 500 has dropped from a gain of 58% to also increasing 28%. The Dow entering Bear territory is the second fastest in history, after the one day decline in October 1987 of 23%. Trump’s stock market continues its escalator up, elevator down performance.

Trump’s focus on the stock market

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 them 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 has not been very accurate as the market has continued its rapid descent. Over the next two plus weeks the Dow has fallen 16%. With the Dow’s 20% decline it has wiped out all of its gains of the past two plus years since November 24, 2017.

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. Two of the charts below start with their respective January 20 inauguration dates, which is the official day that a President takes the Oath of Office. However, a 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. This may also apply to Trump with the coronavirus, but only time will tell if his policies and statements will help or hurt the market.

Trump’s stock market returns vs. Obama

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 19% under Trump and over the same timeframe it increased 65% under Obama. Trump’s performance will be worse if the aftermarket figures are anywhere close to being accurate on Thursday.

For the first three plus years since Trump’s inauguration the S&P 500 has risen 21% while under Obama it increased 69%.

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 28% since Trump’s election, while under Obama it increased 35% and 64% from the low point in February 2009.

The Dow is in an extremely oversold position with its RSI, or Relative Strength Index, in the upper portion of the chart at 31.46. 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 also risen 28% 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 oversold with an RSI of 31.19. It closed below its 100-day moving average but above its 200-day moving average, so from a technical perspective is not as “broken” as the Dow.