By Robert Burgess / Bloomberg Opinion
The victories for President Biden keep adding up heading into Tuesday’s State of the Union address. The American Rescue Plan. The Infrastructure Act of 2021. The Inflation Reduction Act of 2022. As impressive as those accomplishments are, perhaps the most astonishing one is what has happened in the stock market.
Yes, the stock market.
Despite dropping into a bear market last year, the S&P 500 Index has gained 24.1 percent since Election Day in November 2020. What’s remarkable is that under Donald Trump, a president with a reputation for market-friendly policies, the S&P 500’s performance wasn’t much better between Election Day in November 2016 and the same point in his administration, gaining 26.5 percent. And although the Dow Jones Industrial Average and Nasdaq Composite Index did better under Trump, Biden has him beat on the New York Stock Exchange Composite Index.
And if you believe that valuations are a sign of confidence, then with a price-earnings ratio of 19.8, investors are more confident in America’s companies than they were at the same point in Trump’s administration, when they assigned a P/E ratio of 18, according to data compiled by Bloomberg. To be sure, it’s not as if markets under the Trump administration didn’t face their fare share of adversity. Markets were rocked by China’s decision in late 2018 to devalue the yuan. And earlier that year, markets were upended by the “volmageddon” episode.
Yes, presidents get too much of the credit when the economy and markets are doing well and too much of the blame when they don’t. Plus, markets are influenced by a seemingly infinite number of variables and don’t always reflect current economic conditions, and presidents actually have very little influence. But those who praised Trump for the way the markets performed under his administration should give Biden his due.
So as Biden prepares to deliver his State of the Union address to Congress on Tuesday — and soon thereafter decides whether to seek reelection — his speechwriters are probably omitting any reference to the stock market after the S&P 500’s 20 percent slide last year. But that would be wrong. They should sing it loud and proud; the stock market loves Joe Biden! Maybe. To be honest, nobody actually knows what the stock market is saying. But taking a victory lap wouldn’t be so bad.
Robert Burgess is the executive editor of Bloomberg Opinion. Previously, he was the global executive editor in charge of financial markets for Bloomberg News.
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