An unexpected event began near the end of last year: The stock market, which had been going sideways since early 2022, changed direction and began heading up. Soon, it was in bull market territory. The trend is continuing into the new year: The Dow Jones Industrial Index closed above 38,000 for the first time Monday, a record high.
The stock market is a notoriously unpredictable beast, and good luck to you figuring out why it’s behaving in a particular way.
Is it the Trump Trade, as a Wall Street analyst claimed, an assumption that the former president could once again find himself in the White House a year from now?
Maybe. Maybe not. The stock market is a notoriously unpredictable beast, and good luck to you figuring out why it’s behaving in a particular way.
But here are two things you need to know. While it’s good news for President Joe Biden, the stock market’s rise this far in advance of the election can’t predict the winner of the presidential race in November. And, yes, candidate Donald Trump will try to take credit for the stock market’s rising.
Don’t fall for it.
Studies show the stock market tends to go up in presidential election years — and even more so in the year before an election. Why this is so is the subject of some debate, though many, understandably, believe that incumbent presidents, eager to boost their own re-elections, govern in a way that they hope will boost the overall economy.
It’s common to say that “the stock market is not the economy,” but that’s not quite right. It’s more accurate to say that “the stock market is a part of the American economy.” A market that’s up is one that leads to an economy with everything from greater consumer spending — most likely because investment gains make Americans, a majority of whom hold investments in the stock market, feel more financially flush — to slightly higher employment and pay. But it’s not all good. There is a downside: As the wealthier are more likely…
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