The 100th day of Joe Biden’s presidency was April 29. Although not much more than a symbolic date, the 100th day of a presidency is often used as a metric to determine just how well a president is performing at the onset of their presidency.
If you used the stock market as a measure of presidential success, it would appear Biden is doing well, as most areas of the market have been screaming higher thus far. Here’s a closer look at exactly how different areas of the stock market have reacted to Biden’s first 100 days, including a comparison with the market’s performance under other commanders-in-chief.
The Overall Market Has Rallied
If you bought an S&P 500 index fund on the day that Biden was inaugurated, congratulations, you’ve already earned a full year’s worth of average market returns on your investment. Since Biden was inaugurated on Jan. 20, the S&P 500 index has risen from 3,798.81 to a close of 4,186.72 on April 27, for a gain of just over 10%. This is just about the average annual return for the market historically.
Infrastructure Stocks Have Continued To Rise
Not surprisingly, infrastructure stocks have been one of the market sectors that has rallied strongly during the early days of the Biden administration. One of Biden’s campaign promises was to commit billions of dollars to infrastructure, and anticipating this development, stocks in this industry have rallied strongly.
Biden’s infrastructure plan aims to invest $2 trillion into everything from roads and bridges to clean drinking water and high-speed broadband. The S&P Global Infrastructure Index is up about 5% year to date, but it’s continuing a rally over the past year which has seen the sector rise by about 27%.
Financials Have Outperformed
The financial sector was in the doghouse in 2020, as record-low interest rates and the economic upheaval created by the coronavirus pandemic has been devastating to profits. However, the effects of both of those negative factors seem likely to diminish in 2021, and investors have been piling into the sector.
Up about 21% year-to-date, the financial sector seems poised to benefit from the Fed’s inclination to keep short-term interest rates ultra-low while the trillions of dollars of government stimulus has been slowly raising longer-term interest rates. Coupled with a growing economy accompanying the reopening of businesses across the globe, the financial sector finally has a bit of a tailwind.
Green Energy Stocks Have Fallen
Green energy is another one of the Biden administration’s top investment priorities. While campaigning, Biden pledged to create 10 million clean-energy jobs. Thus, stocks in industries from water treatment to hydrogen fuel cells seem likely to benefit over the coming years.
Yet, year to date, the S&P Global Clean Energy Index is actually down over 13%. How can that be? The answer is that the stock market is a forward-looking instrument. As the idea that a new presidential administration that could flood trillions of dollars into a market segment seemed more and more possible, these stocks rallied hard in 2020, to the tune of a nearly 138% return in the iShares Global Clean Energy ETF. A little giveback was to be expected in 2021, but the sector could be poised for further gains going forward.
Energy Stocks Have Rallied
The energy sector has been another beneficiary of the Biden administration thus far, in spite of his pledge to support clean-energy industries. Oil and energy stocks took a beating in 2020, as global demand cratered thanks to businesses shuttering and the travel industry all but vanishing. With the economy slowly reopening thanks to the distribution of the COVID-19 vaccines, investors have anticipated that energy will regain its mojo, hence the massive price appreciation in the sector. Stocks like ExxonMobil, Marathon Oil and Diamondback Energy have been huge beneficiaries, jumping 41.5%, 74% and 73%, respectively.
Tesla Has Flattened Out
Tesla seems emblematic of the Biden administration as a whole, an electric vehicle company that pours nearly endless resources into clean battery development. So, why is the stock essentially flat on the year?
While there are countless reasons why a stock may not have kept up with the overall market, the likely culprit is Tesla’s immense outperformance in 2020. Tesla outperformed every other stock in the S&P 500 and Nasdaq-100 in 2020, returning 743%. Numerous factors will no doubt continue to keep Tesla a volatile stock, but with the tailwind of the Biden administration behind the company’s primary product, the stock will certainly continue to make news.
Retail Stocks Are Soaring
Retail stocks were set for a big bounce in 2021 after an absolutely devastating 2020. Analysts at Moody’s, as quoted in Investor’s Business Daily, projected that earnings for the most badly beaten-down retail stocks could soar by 450% to 500% in 2021.
Included in that list were prominent retailers such as Macy’s, Kohl’s and Nordstrom. As the Biden administration has delivered on its promise to administer millions of doses of COVID-19 vaccines per day, America has been slowly reopening, and shuttered retail businesses are set to recover. Macy’s alone is up over 54% already in 2021, with Kohl’s and Nordstrom not far behind at 20% and 48%, respectively.
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Small-Cap Companies Are Outperforming Large-Cap Stocks
One of the projections many analysts made coming into 2021 was that small-cap companies would outperform large-cap stocks in the early days of the Biden administration. Thus far, those estimates have proved correct, although the effect has begun waning in April.
Smaller companies typically outperform during the early stages of economic recoveries because they are more economically sensitive than large companies and they are usually more reliant on the domestic economy, rather than the global economy. The recovery began in 2020 and spilling over into 2021 drove the Russell 2000 small-cap index to a one-year gain of 86.7%, versus the 48.8% gain in the large-cap S&P 500 index. Year to date, gains in those indices have been over 16%, versus just under 12%, respectively.
Some Individual Stock Gains Were Preloaded in 2020
Just like with some sector indices, some individual stocks that seemed to be well-positioned for a Biden presidential administration have actually been flat or even down thus far in 2021. Examples include First Solar, down about 9%, Advanced Micro Devices, down about 6%, and of course Tesla, discussed above. However, all three of these stocks — and many others — already had huge runups in 2020, perhaps at least partially in anticipation of a potential Biden administration. First Solar, for example, rose 73.48%, while Advanced Micro Devices shot up 88.7% and Tesla skyrocketed 743%.
How Biden’s First 100 Days Compare With Other Presidents
As cited in Business Insider, JPMorgan analysts have announced that the first 100 days of the Biden presidency have seen the highest stock market returns under any president over the past 75 years. Record fiscal and monetary stimulus have been the primary engines for that growth, according to the analysts. However, going forward, this strong tailwind might start to wane. According to the JPMorgan team, coming tax hikes to fund infrastructure and social spending may act as a drag on the stock market later in 2021.
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