The stock market’s performance following a presidential inauguration is often a topic of interest for investors. While historical data reveals mixed results, recent trends suggest a more positive outlook. This analysis delves into the historical performance of major U.S. stock indices on and after inauguration days, providing insights for investors.
Historically, the S&P 500 has shown an average decline of 0.27% on or after inauguration day, based on data dating back to 1949. Similarly, the Dow Jones Industrial Average has averaged a 0.24% decline. The Nasdaq Composite, a younger index, reflects a slightly larger average decline of 0.35%. However, this long-term trend contrasts sharply with recent market behavior. The past three presidential inaugurations have bucked the historical trend, resulting in market gains.
In 2017, Donald Trump’s first inauguration coincided with a 0.34% rise in the S&P 500. More recently, Joe Biden’s inauguration in 2021 saw the S&P 500 surge by 1.39%, marking the most significant inauguration day gain since Ronald Reagan’s second term commencement in 1985. This positive performance extended to other indices, with the Dow Jones Industrial Average rising 0.83% and the Nasdaq Composite gaining 1.97%. These recent gains suggest a potential shift in market sentiment surrounding presidential transitions.
The table below presents a detailed overview of market performance on inauguration days, spanning from President Harry Truman to President Joe Biden. It includes percentage changes for the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average. It’s important to note that if inauguration day falls on a market holiday, the data reflects the market’s performance on the following trading day.
| President | Inauguration Date | S&P 500 (%) | Nasdaq (%) | Dow Jones (%) |
|---|---|---|---|---|
| Joe Biden | 1/20/2021 | 1.39 | 1.97 | 0.83 |
| Donald Trump | 1/20/2017 | 0.34 | 0.28 | 0.48 |
| Barack Obama | 1/21/2013 | 0.44 | 0.27 | 0.46 |
| Barack Obama | 1/20/2009 | -5.28 | -5.79 | -4.01 |
| George W. Bush | 1/20/2005 | -0.78 | -1.34 | -0.65 |
| George W. Bush | 1/20/2001 | 0.03 | -0.45 | -0.09 |
In conclusion, while historical averages indicate a slight negative trend for market performance on and after inauguration days, recent inaugurations have defied this pattern. The positive market reactions witnessed during the last three presidential transitions warrant attention. While past performance is not indicative of future results, the recent trend of market gains following inaugurations offers a potentially optimistic perspective for investors.
