The current Biden Market Surge represents the second time in a row that Wall Street has pleased a new president: Stocks gained more than 6% in the inauguration period after Donald Trump was defeated in 2016 by Donald Trump. Plus 100 days.
But there is a big difference: Trump was inheriting an economy that was growing at a steady rate during the post-recession recovery. Biden is running in the Kovid-19 economy.
Expectations of stimulus, combined with the fact that Americans are beginning to receive coronovirus vaccinations, have raised hopes that the economy – and corporate income – will improve later this year.
Oil, bank and small cap stocks witnessed big gains
Until that time, the energy and financial sectors have been the best performers since the election. Oil companies should benefit from an improvement in the economy and rising crude oil prices, while banks often do better due to rising demand for loans.
Small cap stocks have also outpaced the S&P 500, which takes into account that smaller companies are at greater risk to the US economy than large multinationals dominating the Dow and S&P 500.
The Biden boost also contradicts that in the previous two instances Shares demonstrated that a new president was coming to power during economic times.
The S&P 500 fell more than 6% at the end of 2000 and in early 2001 George W. Bush defeated Al Gore. That election was also contested by uncertainty, which was already present in the market as a result of the bursting of the dot-com bubble in 2000.
And the stock lost nearly 20% from mid-November 2008 to mid-2009, when Biden’s former boss Barack Obama defeated the late McCain. Investors were still nervous about the collapse of Lehman Brothers and the rash of high-profile bank failures at the time.
But experts say investors need to realize that the market performance between the election and the inauguration is not necessarily for the rest of the year.
CFRA’s research chief investment strategist Sam Stowal said in the report that “the S&P 500 is overdue for the digestion of gains that could push the index value below its 2020 closing level.”
In other words, the rest of the year can be bumpy. But any decline can be summed up: Stowall also predicted that any market deficiencies in 2021 would “set in early enough in the year to allow time to recoup all losses and a higher level.” Can also be installed. ”