The second presidential term of Donald Trump has reminded the world of how much a U.S. president can affect the global economy. The conflict in Iran has caused severe uncertainty about global oil supplies, raising energy costs and inflation. Other “Trumpflation” policies, like a trade war with Canada and tariffs on imported goods, have raised costs for businesses and consumers and helped push up long-term interest rates on U.S. Treasury bonds.
Despite some negative impacts of these Trump policies, the U.S. economy and stock market have remained resilient. The S&P 500 (SNPINDEX: ^GSPC) has gained about 28% since Trump was inaugurated on Jan. 20, 2025.
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Trump still has more than two years left in office, but with the 2026 midterm elections approaching in November, many investors might be looking ahead to the next president.
What do presidential transitions have to do with the stock market? Should you change your investments based on which president (or party) is in power in Washington, D.C.?
History shows us that, despite some short-term uncertainty, most of the time the U.S. stock market keeps growing in the long run — no matter who’s in charge in the White House.
Let’s look at some lessons from presidential history and see what new presidents mean for your stock portfolio.
Presidents don’t matter (much) to the stock market
It’s not fair to say that “presidents don’t matter.” Policy choices made in the White House affect many aspects of everyday life, national media narratives, and America’s cultural mood. But as far as the stock market is concerned, who the president is might matter less than people think.
According to research from Citizens Bank, ever since 1927, the average annual return of the S&P 500 has been about the same in presidential election years as in non-election years. In most presidential election years, the S&P 500 tends to have higher volatility in the last few months leading up to Election Day in November. That’s because, especially in a close election, investors may face significant uncertainty about which candidate will win, which policies will be implemented, and what that might mean for various industry sectors and companies.
But even though the stock market can wobble in the short term due to bad news or policy choices, the U.S. stock market has delivered strong returns across presidencies of both parties. Under President Barack Obama from 2009-2017, S&P 500 annualized returns were 13.8%. That’s about the same as President Trump’s first-term stock market performance, with 14% annualized returns during 2017-2021.
