New york
CNN Business
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The stock market started with a boom under President Biden, but it’s heading into a midterm election that looks more like a bust.
As of Monday, the S&P 500 was down 1.2 percent since Biden took office in January 2021. According to CFRA research, this is the second-worst performance during the first 656 days of a presidential calendar since former President Jimmy Carter.
Of the 13 presidents since 1953, Biden ranks ninth in stock market performance at this point, behind only former presidents George W. Bush (-32.8%) Carter (-8.9%) Richard Nixon (-17.2%) and John F. Kennedy (-2.1%), according to CFRA.
By contrast, both of Biden’s immediate predecessors had higher stock markets going into their first midterm elections. According to CFRA, the S&P 500 rose 52.2 percent during the first 656 days of former President Barack Obama’s presidency and 23.9 percent during former President Donald Trump’s term.
Market volatility is largely linked to high inflation, which has prompted the Federal Reserve to initiate a punitive rate hike.
Of course, the stock market is not the economy, nor should it be seen as a barometer to steer by. Good news for Main Street is sometimes considered bad news by Wall Street.
Despite recent losses in the stock market, the job market remains historically strong. The unemployment rate is near a half-century low and total employment has returned to pre-Covid levels.
And it’s worth noting that stocks soared in the early days of the Biden era. The S&P 500 is up 27 percent in 2021 as the economy recovers from Covid-19.
“The first year was amazing. And then we gave a lot of it back,” said Sam Stovall, chief investment strategist at CFRA Research.
The S&P 500, weighed down by the Fed’s all-out war on inflation, is down 20% this year, its worst year since 2008.
The stock market decline under Biden is significant because many Americans own stocks directly or indirectly in their 401(k) and pension plans. This year’s sales wiped out trillions of dollars from nest eggs, 401(k) plans and college savings plans.
Market volatility also erodes consumer confidence. A CNN poll found that 75% of likely voters feel the economy is in recession.
Some of the reasons for the 2022 market selloff were largely out of Biden’s control, including Russia’s invasion of Ukraine, Covid-related supply chain headaches and the Fed’s delayed response to inflation.
Other factors, like whether Biden boosted an already strong economy with his Rescue Plan, will be debated by economists for years to come. (A study from the San Francisco Fed argues that fiscal support may have helped increase inflation.)
The stock market is likely to bounce back from recent losses — especially if the U.S. avoids a recession or inflation cools enough to allow the Fed to loosen the brakes on the economy. Goldman Sachs told clients on Monday that it is “highly plausible” that the Fed is reducing inflation without triggering a recession.
On the other hand, if a recession occurs, retirement accounts may shrink even more.
“We don’t think it’s over,” Stovall said. “There’s a good chance the bottom isn’t in.”
Leaders often take too much credit when things go right and too much blame when things go wrong. But the market’s lackluster performance under Biden reflects broader economic challenges weighing on voters’ minds in this midterm election.
Correction: An earlier version of this article misstated the number of calendar days in the analysis as well as stock market performance under different US presidents during that period.
