Since the late 1890s, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI) or benchmark S&P 500 (SNPINDEX: ^GSPC) have risen in 26 of the last 33 presidential terms. But under President Donald Trump, annualized returns for the Dow, S&P 500, and growth-stock-driven Nasdaq Composite (NASDAQINDEX: ^IXIC) have been higher than most other presidents.
During Trump’s first term (Jan. 20, 2017 – Jan. 20, 2021), the Dow, S&P 500, and Nasdaq gained 57%, 70%, and 142%, respectively. These widely followed indexes have rallied 14%, 19%, and 25%, respectively, since Trump’s second, non-consecutive term began (through April 17).
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
While there are plenty of catalysts fueling these double-digit returns, there’s also growing skepticism that equities can continue their parabolic climb. It has some investors wondering whether a stock market crash is brewing under President Trump.
Though no forecasting tool or correlated event can ever guarantee what’s to come on Wall Street, one predictive tool that has 155 years of historical data in its sails provides a clear outlook for the Dow, S&P 500, and Nasdaq.
But before we look to the future, we have to spend some time digging into the past. Once the foundation of this outsize rally in stocks under Donald Trump has been explained, we can better understand what’s to come for Wall Street.
The first thing to recognize is that these double-digit annualized gains aren’t entirely tied to actions taken by Trump. For example, the rise of artificial intelligence (AI) and the advent of quantum computing were underway before Trump took office for his second term.
The global addressable opportunity for these game-changing technologies is massive. PwC analysts foresee AI creating $15.7 trillion in worldwide economic value by 2030, while Boston Consulting Group estimates quantum computing will create up to $850 billion in global economic value by 2040. If these lofty forecasts are even remotely accurate, there should be a laundry list of winners.
Additionally, quarterly operating results for S&P 500 companies have consistently outpaced analysts’ expectations. Though the bar is historically set low enough that profit beats are commonplace, better-than-expected operating results have helped power Wall Street’s major stock indexes to new heights.
