In the 1,456 days since Donald Trump was elected president, corporate taxes were cut, a trade war was fought, the Covid-19 pandemic raged — and the largest American companies added near $9 trillion in value.
Up 55% since Election Day 2016, the S&P 500’s return is the fourth-best for a first-term president, data compiled by Bloomberg show. It’s a feat that appeals to a president who has graded and flaunted his success using points on the Dow Jones Industrial Average, often to the exclusion of other measures.
Numbers don’t lie, but deciding how much credit he deserves for the run is one of the most debated topics in markets. Trump’s corporate tax cut indisputably buttressed bottom lines, but monetary policy has also been extraordinarily accommodative during his administration. The president inherited a booming economy from Barack Obama, whose terms coincided with only slightly smaller gains in the S&P 500 than his successor. In the end, stocks did what they almost always do over any period as long as four years — go up.
“Whether you’re talking Obama or you’re talking Trump or whoever, it’s hard to link that back to a president,” said Nathan Thooft, Manulife Investment Management’s head of global asset allocation. “They’re just one person among many people that are making decisions at the governmental level, let alone all the non-government related things that are actually driving the stock market.”
Below are views from professional investors on how to frame Trump’s role in the market over the last four years.
Where Credit’s Due
During Trump’s term, says Brian Nick, chief investment strategist at Nuveen, a friendly Fed inspired confidence, and valuations played a large role as well. As far as stock prices are concerned, the president deserves credit for slashing the corporate tax rate in early 2018, which allowed stocks to overshoot where models might have shown they would end up after four years.
But Nick points to another corner of the market — the technology sector — as evidence no single human was responsible for the runup. American companies like Apple Inc. and Facebook Inc. were already large going into Trump’s presidency, but they’ve since firmly entrenched themselves as market leaders.
“These megacap companies continue to out-earn the rest of the market,” said Nick. “So a lot of the return — especially this year — has come from this small handful of companies. And I don’t think you can say there was a Trump policy that necessarily helped. It was just this was sort of what the economy has turned into in the U.S.”
Deregulation Elation
The Trump administration has relaxed many regulations over the last four years, rolling back, for instance, restrictions on offshore oil and gas drilling and scaling back environmental rules.
Though it’s tough to quantify the direct impact on stock prices, the loosening has been a key driver of returns, says Anik Sen, global head of equity at PineBridge Investments.
“The less friction or the less regulation there is in capital markets, markets like that because it means capital can flow without friction to reward the highest-returning and the best companies,” said Sen. “Many of the policies we saw and many of the actions we saw I’m sure led to better markets.”