On January 20,2025, this country will inaugurate a new and previous President. This inauguration represents a change in political power in the Executive Branch. How much impact will this transition of power affect the Stock Market?

Historically, the U.S. Stock Market tends to struggle a short time after inauguration day. Since the DOW Jones was created in 1896, one of its worst quarterly returns has been the first three months of a President’s term in office, producing an average return of 0.2%. This compares to an average return of 1.9% in the other quarters of the Presidential term. This pattern has been consistent whether or not the incumbent political party won or lost. 

In Donald Trump’s first presidency, the S&P 500 performed very well. Specifically, the S&P advanced 70% during Trump’s first term, this equates to 14.1% annually. Some analysts are anticipating strong returns in his second term driven by deregulation and tax cuts.  In fact, since the creation of the S&P 500 in 1957, the index performed better under President Trump than any other president except Bill Clinton. 

It is important to remember  that presidents do not control the stock market. However, they can influence it by shaping policies that impact the economy. As Trump prepares to be sworn in as the 47th president of the United States, he is set to inherit a strong economy, characterized by robust growth opportunities, low unemployment, and positive financial markets. The agenda of a second Trump administration could have a stimulating effect on the U.S. economy in 2025 and into 2026. 

Many experts making stock market forecasts for 2025 are convinced that stocks should enjoy not only a rally, but broad-based prosperity. Sameer Samana, a global market strategist at Wells Fargo Investment Institute, noted the importance of the Republicans capturing not only the White House, but the Senate and House of Representatives as well. According to Samana, this red sweep means “more cohesion,” supporting a strong stock market forecast for the coming year.

Tickers to consider:  IKT, KALA, EVAX, JTAI

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