Benzinga - by Shanthi Rexaline, Benzinga Editor.
The U.S. market hit a record high on Wednesday, and the buying continued into Thursday before fizzling out by the close of trading, but not before the Dow Jones Industrial Average surpassed the peak of 40,000. It also provided an opportunity for President Joe Biden to respond to his rival Donald Trump for a comment the latter made during a 2020 presidential debate.
What Happened: Biden’s campaign team posted a video clip of the debate in which Trump is seen saying, “The stock market will boom if I am elected. If he [Biden] is elected, the stock market will crash.” The clip was paired with another highlighting the Dow Industrials’ milestone.
Captioning the post, the team said, “Right: The Dow hitting 40,000 for the first time ever in history today.”
Biden seized the opportunity to highlight his accomplishment and the futility of Trump’s prediction. He re-shared the post from his personal X handle along with a picture of him holding an ice cream cone in his left hand, with his right hand holding out the letter “L,” apparently referring to Trump as a “loser.”
https://t.co/4ZAxbEHLRr pic.twitter.com/rXDjNWFnb4— Joe Biden (@JoeBiden) May 16, 2024
In a January campaign speech in South Carolina, Biden called Trump a loser. “Losers are taught to concede when they lose, and he’s a loser,” he said, referencing the 2020 election which he won. Later that month, in another campaign rally, Biden said, “You’re the reason Donald Trump’s the defeated president. And you’re the reason we’re going to make him a loser again.”
Why It’s Important: The record performance of the market is attributable to a report showing a cooling off in consumer price inflation.
Biden’s tenure began during a time when the country was dealing with the impact of the COVID-19 pandemic. Some stimulatory measures to nurse the economy back to health kept the stock market going in 2021.
Things took a turn for the worse the very next year, with an inflation spike from the fiscal and monetary stimuli prompting the Federal Reserve to embark on an aggressive rate-hiking spree.
Reacting to these moves, the stock market went into a downward spiral in 2022. The resilient job market and strong corporate profit growth brought traders back to the market in 2023, and the buoyancy has continued into this year.
The Trump era also saw the market finish in the green. From his inauguration date to the end of his term, the S&P 500 Index gained about 68%. Between Biden’s inauguration date in January 2021 and the present, the index has been up a more modest 39.4%.
All Eyes On Fed: The current market rally is predicated on the Fed cutting rates, which is contingent on inflation moving below the upper ceiling of the central bank’s target of 2%. Expectations are that the Fed will announce its first Fed funds rate cut at the September meeting, allowing leeway for the market to make another leg-up before Biden completes his first term.
Despite Biden’s chest-thumping, not many Americans see his administration as a better bet for handling the economy as critics have pointed out its fiscal indiscipline and racking up of a huge debt pile.
The Nov. 5 election could offer better clarity on whether Biden appeals to voters with his propositions concerning the market and economy.
Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY), an exchange-traded fund that tracks the performance of the S&P 500 Index, edged down 0.1% to $528.62 in premarket trading on Friday, according to data from Benzinga Pro. The ETF, though, is up 11.6% year-to-date.
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