The Trump Effect: The S&P 500 +28% Since His Election

The Trump Effect: The S&P 500 +28% Since His Election

The Trump Effect: The S&P 500 +28% Since His Election

$SPY, $ABMD, $GE

President Donald Trump has taken credit for the stock market’s gains during his 21 months in the White House, and those claims are reasonable given the impact of tax cuts and pro-business policies on investor sentiment.

The S&P 500 has risen 28% since President Trump’s election in November 2016 to the eve of Congressional midterm elections Tuesday.

This surpasses the market’s performance over the same time frame under any other President in the past 64 years.

Under President Dwight Eisenhower, the S&P 500 rose 29% from his election in November 1952 through November 1954.

Sweeping corporate tax cuts, an initiative driven by President Trump, supercharged US companies’ earnings and helped lift the cash-rich technology sector.

The Republican party last year passed the biggest overhaul of the US tax code in over 30 years, boosting US corporate earnings.

How the market shakes out in the final 2 years of Trump’s presidency will probably be influenced by Tuesday’s elections.

Analysts expect pressure on stocks if Democrats gain control of the House of Representatives and a sharper downward reaction if they sweep the House and Senate.

On the other hand, if Republicans hold their ground, stocks could gain further, with hopes of more tax reform ahead.

President Trump’s strong stock market record has been maintained even after a recent pullback on Wall Street, as worries about trade disputes, inflation and rising interest rates have increased caution among many investors.

Starting in March of 2009 as the world recovered from the financial crisis, the S&P 500 has enjoyed its longest Bull market in history.

With more than half of  President Trump’s Presidency still ahead, how the market will perform over his whole term is unknown.

Democratic President Bill Clinton saw the S&P 500 3X during his 2 terms in the White House.

Average S&P 500 company earnings per share are on track to rise 24% this year, the strongest annual gain in 8 years, according to the data.

Investor confidence stemming from the tax cuts and President  Trump’s other business-friendly policies so have more than made up for ongoing worries on Wall Street that his trade dispute with China is hurting the US economy, and that it could become worse.

All indications are that the US trade dispute is in resolution mode.

Tuesday China’s VP Wang Qishan reiterated China’s readiness to work with US to resolve trade disputes

The tax cuts led multinationals in the technology sector to repatriate billions of dollars in profits held overseas, some of which went toward buying back stock and sending Wall Street higher.

The S&P 500 information technology index has gained 51% since President Trump’s election.

Financials, which benefited from President Trump’s deregulation of the banking industry, have climbed 34% since 8 November 2016.

The S&P 500 energy index is flat since Trump’s election.

Semiconductors have fared better than any other industry group, even though they are highly exposed to China and could become casualties in President Trump’s trade dispute with Beijing.

Along with telecommunications, food and tobacco companies, automakers on average have fared worst among 27 industry group’s since President Trump’s election.

Interest rates, economic growth, company earnings and inflation are widely viewed as strong influences on stock prices, making who holds power in Washington just 1 of many factors affecting investor sentiment.

Notably, Abiomed (NASDAQ:ABMD) the S&P 500’s Top performer since President Trump’s election, has risen over 260%, helped in part by the success of its Impella heart pumps.

General Electric’s (NYSE:GE) 68% loss makes it the S&P 500’s Worst performer since President Trump was elected. The former industrial powerhouse has foundered in several Key markets in recent years and is aggressively cutting costs and selling businesses.

Making and Keeping America Great!

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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