President-elect Joe Biden has watched the stock market surge as he prepares to take power next year. The rally appears to be driven largely by the spate of positive coronavirus vaccine news but has nevertheless been helped by some of Biden’s initial moves as President-elect.
The Dow Jones Industrial Average (^DJI) broke 30,000 for the first time one day after the news broke that the President-elect had picked Janet Yellen as his Treasury Secretary.
Mohamed El-Erian, the President of Queens' College University of Cambridge, attributed the booming market this month mostly to the positive vaccine news. But he also noted that we’ve had “clarity of our political transition, we’ve had clarity about appointments” during an appearance Friday on Yahoo Finance.
President Trump of course incorrectly predicted that the markets would crash if Biden won.
Trump also often said that a President’s record should be judged based on the stock market following election day, not inauguration day.
Now, as November nears its end, the S&P 500 (^GSPC) is up over 11% for the month and it’s being noted that Biden’s start with the market ranks among the top in recent history for new Presidents.
Here’s how the markets did in other months when America learned it would soon have a new President.
2016: The ‘Trump rally’
President Trump liked to say that the stock market surged when he became President. It did but his victory actually initially rattled the markets. When the Associated Press formally called the election for him late on Tuesday night, S&P 500 futures were off 3.4%.
“This is not the status quo and we are going to have to digest that,” said Yahoo Finance Editor in chief Andy Serwer in the hours following Trump’s surprise victory.
The markets did indeed digest the news and the losses turned to gains in the hours that followed as the extent of Trump’s market-friendly policies became clear. By the end of November, the Dow closed above 19,000 for the first time and many were calling it a “Trump rally.” The S&P 500 rallied 3.4% for November as a whole.
The gains were also a continuation of a long bull run during Barack Obama’s presidency.
1980: A high water month for a president-elect
A president-elect who, like Biden, enjoyed a massive market rally before taking office was Ronald Reagan in 1980.
The S&P surged over 10% in November 1980 after the former Governor of California defeated Jimmy Carter in a landslide victory.
But that rally is a historical parallel that Joe Biden’s team will almost surely not want to emulate in full.
As it turns out, the market ended up peaking at the end of that November and then immediately went into a 2-year long bear market driven by a range of factors like oil prices and inflation.
On November 28, 1980, the S&P closed at 140.52. It wasn’t until almost 2 years later - Nov. 3, 1982 - that the index again closed above the 140 mark.
2008: The last time Joe Biden came into the White House
The worst November in recent history for a President-elect came when Joe Biden was the Vice-President elect.
The market fell 7.5% in November 2008. At one point - on Nov. 20, 2008 - the S&P closed down over 20% for the month and the lowest point for the index since 1997. The markets then rallied a bit in the final days of the month.
The declines that month were mostly attributable to the ongoing economic crisis. Markets dropped over 40% between May 2008 and March 2009 before embarking on a record-breaking bull run that only ended when the coronavirus struck.
As President-elect Obama and Joe Biden announced their economic team on Nov. 24, 2008, Obama began by acknowledging the “economic crisis of historic proportions” and went on to discuss how “we need a recovery plan for both Wall Street and Main Street – a plan that stabilizes our financial system and gets credit flowing again” along with other issues.
Other new presidents in 1988, 1992, 2000
The months that Bill Clinton and George H.W. Bush won the presidency were mixed for investors. Clinton enjoyed S&P growth of 3% in November 1992 while the first Bush saw declines of 1.9% in 1988.
In those years, other economic factors appeared to be driving the market more than the new President-elect.
In 1988, after George HW Bush was elected to succeed Ronald Reagan, news reports at the time suggest that the Bush victory wasn’t a huge driver of stocks. A New York Times roundup of the market at the end of that month was described trading as “slow.”
In 1992, a Reuters story on the eve of Bill Clinton’s victory quoted an expert saying that stock gains had been "de-politicized." Although a New York Times column by Floyd Norris at the end of that year notes that a surge in stocks had begun around election day.
The disputed 2000 election saw markets drop over the course of that November but they moved without a President-elect in place as George W. Bush and Al Gore fought over Florida’s electoral votes.
Those declines - like most stock market movements during times of political unrest - can often be more fully understood based on larger economic trends. In 2000, the market had already been falling since March 2000 as the dot-com bubble burst and it had months to go – long after President Bush had been inaugurated – before they bottomed out.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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