But I think it’s more likely that the market doesn’t care much one way or another.
As I’ve noted before, the stock market is amoral and apolitical. There have been market misfortunes under both political parties but, for the most part, the stock market has done well under both Democrats and Republicans.
It’s easier to find patterns in the market than it is to prove that they matter.
A comparison of market returns during the Obama and Trump administrations is startling. “The performance of sectors during the presidencies of Obama and Trump shows that the impact of the person in the Oval Office may not be as significant as often assumed,” Bespoke Investment Group said. “While the two were polar opposites in terms of policy and style, the stock market sectors that led and lagged during each president’s tenure were largely the same.
“In President Obama’s eight years, the three top performing sectors were consumer discretionary, technology and health care; for Trump, the three top performing sectors were the same,” the group said. “Likewise, energy was the worst performing sector for both presidents, and financials was in the bottom three.”
Similarly, former President Trump and President Biden aren’t remotely alike in terms of policy, character, style or adherence to the rule of law. Countless Wall Street reports say, quite logically, that specific market sectors may do better under one leader than the other, though the more I look at it, the less I’m sure even of that.
President Biden has taken strong positions on climate change. Former President Trump has downplayed the problem when he’s acknowledged it’s a problem at all, and he has favored fossil-fuel companies. Yet consider the returns of exchange-traded funds that track the clean energy and fossil-fuel stock sectors:
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The iShares Global Clean Energy E.T.F.: 26.6 percent, annualized, under Mr. Trump; minus 19.8 percent, annualized, under Mr. Biden.
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The SPDR S&P Oil & Gas Exploration and Production E.T.F.: minus 13.3 percent under Mr. Trump; 26.9 percent under Mr. Biden.
The Ukraine war and a burst of global inflation had more to do with the rising price of oil and the surge in fossil-fuel stocks than any Biden administration policies, in my estimation. And the increasing popularity and profitability of clean energy companies during the Trump administration didn’t stem from administration policy, which favored fossil-fuel companies.
Read More: What Presidential Election? So Far, the Stock Market Doesn’t Care.