Will There Be a Stock Market Crash in Year 6 of Donald Trump's Presidency? One Historically Flawless Metric Paints a Worrisome Picture.
When investors’ willingness to take risks rapidly rises, look out below.
Overview
From a purely statistical standpoint, Wall Street has enjoyed having Donald Trump in the White House. Although Wall Street's broad-market indexes rise under most presidents, the average annual returns of the time-tested Dow Jones Industrial Average (DJINDICES:^DJI), benchmark S&P 500 (SNPINDEX:^GSPC), and tech-fueled Nasdaq Composite (NASDAQINDEX:^IXIC) are considerably higher under President Trump than under almost all presidents since the late 1890s.
While not all of Wall Street's upside catalysts pertain to Trump (e.g., the artificial intelligence (AI) infrastructure build-out), certain policies have directly provided a boost, such as the signing of the Tax Cuts and Jobs Act into law in December 2017. Permanently lowering the peak marginal corporate income tax rate from 35% to 21% enabled businesses to retain more of their income, leading to record S&P 500 share buybacks in 2025.
The Trump bull market may face its toughest test yet. Image source: Official White House Photo by Daniel Torok.
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Originally published at www.fool.com.