Potential Stock Market Run Under Biden Administration

• Author: Jeffrey Simmons
• Posted: 2024-01-31

One of the many concerns from the Republican party and often used during the 2020 campaign was that Joe Biden would slow down the economy further, and thus the financial hardships caused by the pandemic would become even worse. However, since President Joe Biden has taken office, the stock market has not only been on a positive run but has actually outperformed many of his predecessors. This was seen right after the 2020 election when the S&P 500 began to grew rapidly to the highest levels since World War II.

What's Causing This Economic Boom?

The sudden economic growth, or "Biden Boom," as some have described it, occurred because of several factors that seemed to happen all at once. The first one includes the process of many states, even those with the strictest covid policies, beginning to open back up for business. The second includes the stimulus plans that were unveiled and passed by the Democratic-controlled Congress early in the year. The next big thing to occur was the increase in the distribution of the COVID-19 vaccine. Now that millions of people were vaccinated, tourism began to see a sudden spike. Lastly, it includes the infrastructure plan that President Biden has proposed and is now working with both Congress and manufacturers to get it done. That has sent a lot of confidence throughout the nation that both jobs and business are going to grow in the near future.

Will There be a Slow Down Soon?

One of the biggest concerns for investors is that President Biden will do something that will cause the market to slow down. Contrary to popular belief, Presidents usually don't have too much influence about what happens in the market. They would have to do something very drastic such as declare war or halt certain areas of the economy for the market to react drastically. When it comes to this boom, most experts have stated that they are confident that it will continue to grow to at least the end of 2021 and into the early parts of 2022 due to the high demands of the holiday season.

Steady Hands, Steady Hands

The next question investors are likely to ask about this "Biden Boom" is how much it is going to grow and how fast. To receive that answer, it is important to look to the past and see how those markets reacted. Throughout history, there has been a trend where the last 6 months of the first year of a new president tend to see steady gains. This began in March 2020 when the S&P 500 was at an all-time low. Since that date, the S&P 500 has seen an incredibly 80% surge and looks to continue that trend for the time being. It must be noted that the second year of what is called a "bull market" is often a little less modest than the first but by no means anything to worry about. Jeff Buchbinder, the equity strategist at independent broker-dealer LPL Financial, stated that there are still great signs that the strong economic recovery will continue and boast strong earnings for investors.

Possible Reasons for a Slowdown

As with anything involving the stock market, anything can cause it to suddenly dip or at least slowdown. One of the challenges that President Biden faces in the near future is the risk of rising interest rates, inflation, and a supply crunch. Although these issues could cause the market to slow down, that's likely the only result, a slow down of gains.

Awaiting Biden Administration Policy Clues

As stated above, there are certain factors floating around that may cause the market to suddenly dip a bit or slow down. That is why most people are glued to their television sets to find clues about future Biden policies that are either going to be implemented or planned for when one of these challenges becomes real. Some of those include higher interest rates as well as the possibility of a COVID spike occurring late in the year.

Although the challenges being faced by the Biden Adiminstarion and the rest of the nation are certainly very real and may occur, experts have warned against making emotional, financial moves about things that "may" happen. In this type of economic boom, having a diverse portfolio is key.