Here is a Final Look at How the U.S. Stock Market Has Performed Under Joe Biden

As President Joe Biden prepares to leave the White House, U.S. stocks have marked the conclusion of his term with a notable surge. Since Biden assumed office on January 20, 2021, the S&P 500 has climbed over 55%, the Dow Jones Industrial Average rose more than 39%, and the tech-heavy Nasdaq Composite advanced nearly 46%, according to Dow Jones Market Data.

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Despite these gains, the Dow and the Nasdaq experienced their worst returns since President George W. Bush’s second term (2005-2009). Meanwhile, the S&P 500 logged its smallest gains since Barack Obama's second term (2013-2017), highlighting the uneven nature of the stock market during Biden’s presidency.

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Biden’s term began in the wake of the COVID-19 pandemic, which caused a major economic downturn. Despite the initial turbulence, the stock market posted double-digit returns by the end of 2021, spurred by the global economic recovery and the Federal Reserve’s supportive monetary policies. However, 2022 brought a different story: Wall Street faced its worst year since the 2008-09 financial crisis due to the impact of Russia’s invasion of Ukraine, soaring inflation, and rising interest rates.

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By 2023 and 2024, a tech-driven earnings recovery and the artificial intelligence (AI) boom propelled U.S. stocks to new heights. The S&P 500 posted back-to-back double-digit annual gains and entered its third year in a bull market, offering a strong finish to Biden’s term.

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David Russell, global head of market strategy at TradeStation, noted the "explosive surge" in cyclical sectors that benefitted from the post-pandemic reopening and the Biden administration’s Inflation Reduction Act of 2022. These factors spurred industrial activities, triggering higher interest rates and contributing to the bear market of 2022. However, Russell also emphasized that the AI-driven market surge was largely independent of Biden’s policies, having been in the works for years before its realization in early 2023.

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Looking ahead, Wall Street is also eyeing the return of Donald Trump to the White House. Investors are optimistic that Trump’s potential economic policies—such as tax cuts, deregulation, and tariff increases—could provide further strength to the U.S. economy and corporate profits. Yet, concerns about rising fiscal deficits, inflation, and their potential impact on the government debt market remain on the horizon.

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After Trump’s victory in the 2016 election, stocks jumped sharply, but by January 2021, some of those post-election gains had faded. In fact, from Election Day through January 17, the S&P 500 rose by just 3.7%, its worst performance for that period since Barack Obama’s election in 2008. During the same time, the Dow gained 3%, and the Nasdaq climbed 6.5%, according to Dow Jones Market Data.

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George Cipolloni, portfolio manager at Penn Mutual Asset Management, described how the stock market initially rallied with risk assets gaining and interest rates falling post-election. However, inflation fears quickly returned, leading to a much steeper yield curve.

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Treasury yields surged in response to stronger-than-expected jobs data, which caused a selloff in the government debt market and put pressure on stocks. Yet, the following week, a relatively benign consumer-price index report caused stocks and bonds to rally, bringing down long-term Treasury yields.

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Despite these fluctuations, Russell believes that the concerns about Trump’s policies—such as tariffs potentially driving up inflation—could ultimately be a "wall of worry" that dissipates over time. He suggested that the market has been in a period of consolidation, trading sideways for the past few months, and may soon break out of this phase.

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Looking ahead, Russell sees potential for double-digit earnings growth, a dovish stance from the Fed, and executive orders from the new president aimed at deregulation. Investors who have been sitting on the sidelines may find new incentives to get involved in the market once again.

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On the final trading day of Biden’s term, U.S. stocks finished higher, with all three major benchmarks posting weekly gains as Treasury yields retreated. Investors are now turning their attention to the upcoming inauguration of Donald Trump as the 47th president of the United States, looking for clues about the direction of economic policy in his second term.

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