Trump Will Get the Market’s 100-Day Report Card

Since Franklin D. Roosevelt launched his New Deal with a flurry of activity during his first 100 days in office in 1933, new presidents have been under intense scrutiny during this period.

The stock market has also been a particularly close observer.

A striking lesson from recent history is that the two presidents most associated with robust economic growth and soaring markets over their full terms, Republican Ronald Reagan and Democrat Bill Clinton, saw unimpressive market gains during their first 100 days, the Wall Street Journal reports. Meanwhile, the S&P 500 Index (SPX) rose highest during the first 100 days for Barack Obama, a president not normally considered business-friendly.

To be sure, the first 100 days of a president's term offers only an early glimpse of a White House tenure lasting four to eight years. And the Journal cautions that a president’s performance in the first 100 days must be judged not only with respect to his own actions, but also in the context of the conditions that he has inherited.

The first 100 days, nonetheless, offer an important indication of how investors are reacting to the president's actions. For example, Obama took office in 2009 amid one of the nation's worst financial crises, which had sent stocks plunging. But he also was proactive with a $787 billion stimulus package and massive programs to rescue banks and automakers.

George W. Bush assumed the presidency in 2001 after the dotcom bubble burst, and stocks still trended downward in his first 100 days, despite his proposals for large tax cuts.

Bill Clinton had a contentious first 100 days with Congress, the Journal notes, including disputes over a health care task force led by Hillary Clinton. Stocks edged up unimpressively. In 1989, George H.W. Bush enjoyed an 8% gain in the S&P 500. He was pushing for a cut in capital gains taxes, but global markets also were recording similar gains at the same time, according to the Journal.

With key market indices hitting new highs, and with inflation and unemployment at low levels, Donald Trump theoretically enters office in a strong position. However, the Journal observes, his intention to break with recent economic policy, as well as his unpredictable nature, suggest volatile markets ahead. Contrarian investors worry that the markets have priced in too many positive expectations. That means negative surprises in the future may be much more likely than positive ones. (See: How Trump's Dollar Bashing May Hurt the Economy.)

Looking at recent new presidents’ entire first term, Bill Clinton (first term 1993-97) presided over the biggest gain in the S&P 500, 79%. Next was Barack Obama (2009-13) at 75% and George H.W. Bush (1989-93) at 52%. Ronald Reagan (1981-85) comes in only fourth, at 33%. according to data compiled by Investopedia. The markets retreated in George W. Bush’s first four years (2001-05), down 12%. In 2001 and 2002, the markets were rocked by major corporate accounting fraud scandals, the most prominent being Enron, WorldCom​ and Arthur Andersen. The four-year performance figures for each president compares the close on January 20 (Inauguration Day) to the close on the last trading day before the next Inauguration Day.