What Could Happen in a President’s First Year?

Have you ever wondered what happens to the stock market when a new president takes office? The stock market is like a giant scoreboard that shows how people feel about the  economy. When people are excited and believe businesses will do well, the stock market  goes up. When people are worried, it goes down. 

Let’s talk about the first year of a president’s time in office and look at a few examples from  history to see how the economy might behave. We’ll also include a chart showing how the  stock market did for some presidents in their first year. 

Looking at the Numbers 

Below is a chart that shows the stock market’s first-year performance of the last 15  presidents: 

Stock Market Returns in the First Year of a President's Term 

These numbers come from the S&P 500, which is a group of 500 big companies in the

United States.

What Happened in Good Return Years?

1. 1993 – Bill Clinton (+10.08%)

o What was happening? The Cold War had ended a few years before, and technology companies started becoming more important in the economy. People felt hopeful about new opportunities.

o Why did the market go up? Many investors believed President Clinton’s plans for the economy—like reducing government debt—would help businesses grow. A strong focus on technology also made people excited.

2. 2017 – Donald Trump (+21.83%)

o What was happening? There was a lot of talk about lowering taxes and reducing rules for businesses (deregulation). Some people thought these changes would help companies make more money.

o Why did the market go up? When people believe companies can earn bigger profits, they’re more likely to buy stocks, which pushes the market higher. What Happened in Hard Economy Years?

1. 1969 – Richard Nixon (-8.50%)

o What was happening? Costs of living were going up (inflation), and the Vietnam War was still going on. People worried about high government spending.

o Why did the market go down? Investors often don’t like big worries about inflation and war, so they become nervous and sell their stocks.

2. 1981 – Ronald Reagan (-9.73%)

o What was happening? Prices for everyday things were rising quickly (high inflation), and interest rates (the cost to borrow money) were very high.

o Why did the market go down? These issues made it harder for businesses to grow, so people felt less confident and bought fewer stocks.

Comparing to Today

Right now, people are still talking about inflation (when prices keep going up) and also about higher interest rates (it costs more money to borrow). The government and businesses are trying to figure out how to balance these problems. If people think these challenges will get better, the market might go up. If they worry these issues will stick around, the market could go down. Sometimes, big events like wars, pandemics, or natural disasters can also make the market unpredictable, no matter who is president.

So, What Can We Expect?

If we look at history, a new president’s first year can bring different results. Some presidents, like Bill Clinton or Donald Trump, saw the market jump. Others, like Richard Nixon or Ronald Reagan in their first years, saw it dip. It all depends on what’s happening in the world at the time, how people feel about the economy, and what plans the new president puts in place.

Even if the first year goes great, it doesn’t guarantee the following years will be just as good. The reverse can also be true: a bumpy first year doesn’t mean the market won’t improve later. The most important thing to remember is that the stock market always has ups and downs. Just like a roller coaster, it goes higher at times and dips lower at others. Watching the big picture and staying informed can help us understand why these changes happen.