The stock market continues stubbornly not to collapse in President Obama's second term. Sort of like it stubbornly doubled in his first term.
Despite the warnings of some market prognosticators that an Obama reelection would cause a recession and stock-market crash, the Dow Jones Industrial Average has gained more than 3 percent since Election Day, including the effects of a small post-election selloff supposedly triggered by Obama's victory over Mitt Romney. The Dow gained a little bit more on Tuesday, despite Obama's second inauguration on Monday.
For months leading up to Election Day, it almost got so that you couldn't turn on CNBC without hearing some pundit warning that an Obama victory was going to crash the stock market, for one reason or another. Some days, random market rallies were attributed to imaginary Romney victories. It was the conventional wisdom that, at the very least, markets would favor a Mitt Romney presidency.
People kept right on saying this even though the stock market rallied nearly 10 percent between early June and Election Day, a period during which Obama never lagged Romney in the polls, and his odds of reelection never dropped below 50 percent on the Intrade prediction market.
On the day after Obama's victory, the Dow, the Standard & Poor's 500-stock index and the Nasdaq all dropped more than 2 percent in one day, seeming to justify all the fears Wall Street had about a second Obama term. Stocks fell for a few days more after that.
But that selloff likely had more to do with scary stuff going on in Europe than the election. The Dow rallied on Election Day itself, despite every indication that Obama was going to win. And the market has done almost nothing but rise since.
In fact, the market has done almost nothing but rise during Obama's entire presidency. The Dow is up 85 percent since Inauguration Day 2009, notes Adam Shell of USA Today, making Obama's first term the third best for the Dow among all presidents. (Franklin D. Roosevelt, another business-hating socialist, was the best.)
Obama himself predicted his first-term rally, encouraging people to buy stocks in March of 2009. Right now he looks like a better investment advisor than the many who predicted that his reelection would usher in a new bear market. Those seers include Donald Trump and Charles Biderman, CEO of TrimTabs Investment Research, who wrote in Forbes' "Intelligent Investor" column that Obama's policies would trigger a recession, bleating, "now that the election is over stocks are dropping with no bottom in sight." Since the day of that post, November 14, the Dow is up nearly 9 percent.
The truth is that there's not a whole lot a president can do to single-handedly crash the stock market or bring about a recession. He or she typically needs Congress to go along, not to mention policy makers in Europe, Japan, China and the rest of the world. Many of the temporary market swoons during Obama's first term involved shenanigans by one or more of those other parties.
As Time's Rana Foroohar wrote just ahead of the election, a Romney presidency might actually have been worse for the stock market, given his favor of tighter monetary policy, budget austerity and starting trade wars with China. Many on Wall Street understand this, even though they helped bankroll Romney's campaign. A nice market rally will help ease some of the pain of their loss.
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