US President Joe Biden has now been in office for 100 days. Since then, there have been strong price movements on the stock markets, but the greatest fears of Biden skeptics have not been realized.
Donald Trump had always emphasized that under his leadership the stock market in the USA had developed more successfully than ever before. In fact, the politician and entrepreneur can claim a strong stock market performance for his entire term in office, and from an investor’s point of view, his term in office can be considered a success.
The fear of many investors was that his successor Joe Biden, who is considered less business-friendly than his predecessor and whose prospective tax policy was already one of the biggest topics during the election campaign, would not be able to repeat this success.
However, a look at the stock market performance in the first 100 days in office shows that Joe Biden not only has a more successful stock market performance to his credit, but that after about three months, the financial markets have performed better under his presidency than under any other U.S. president in the last 75 years.
The U.S. Dow Jones benchmark index climbed nearly 11 percent from Jan. 20 to April 20, 2021; under Donald Trump, the stock market barometer was up only about four percent over the same period four years earlier. But stock market performance under Biden not only beat that of his immediate predecessor in office; in fact, historically, only under Franklin D. Roosevelt in the first 100 days of a new presidency. And that was in the 1930s, in the midst of the Great Depression, when Roosevelt consistently closed both banks and markets, which led to a whopping gain in the stock market when it reopened.
Economic stimulus program and support from the Fed
The fact that things went so much better in 2021 than in the first 100 days in office of most other U.S. presidents is also thanks to the fact that Joe Biden launched one of the biggest economic stimulus programs in U.S. history. The package, with which the government intends to cushion the consequences of the Corona pandemic, has a volume of $1.9 trillion and thus corresponds to almost ten percent of the annual economic output of the USA.
The financial markets also received support from the Federal Reserve. The central bank is not only maintaining its ultra-loose monetary policy, but has also flooded the markets with cheap money to stimulate the economy and consumption. Each month, the central bank buys up $120 billion in securities – a continuation of the transactions was agreed to at the recent central bank meeting, until such time as “substantial further progress” toward full employment and price stability is seen.
Corona causes stock market boom
And the Corona pandemic has also played into the new U.S. president’s hands, as lockdowns around the world have brought a flood of new investors to the stock markets. Many Americans have invested their stimulus checks, at least in part, in the financial market, and the fresh money has provided additional support for market development and helped Joe Biden to look back on such a successful first 100 days.
The fact that the U.S. has been pressing the issue of Corona vaccinations during Biden’s time in office so far, which has fueled hopes of an imminent return to the economic road to success, has also been partly responsible for the strong stock market since the end of January.
Difficult times ahead for Biden
What will be important, however, is how the new man in the White House performs in the long run. A first taste of the stock markets’ sensitivity to the Democrat’s policies came a few days ago when details of Biden’s tax plans were leaked, including a significant increase in the capital gains tax. Investors reacted with huffiness, and the stock markets suffered a setback.
In addition, the statesman will face further difficult tasks in the coming months and years. The United States wants to regain its status as a leading international power. To do this, Biden must also address the fractured relationship with China without making too many concessions to the Asian economic power. In addition, one of his challenges will be to strengthen the relationship with NATO, which has been neglected under Donald Trump.