Inauguration Day Stock Market Performance: A Mixed Bag

As Donald Trump prepares to be sworn in for his second term as President of the United States, investors are keeping a close eye on the stock market to see if U.S. equities can continue their recent trend of posting gains after a president is sworn in. Historically, the benchmark S&P 500 stock index has not performed well on average on inauguration day, or the day after if the inauguration falls on a market holiday. However, the last three inaugurations have all resulted in market gains.

Trump's first inauguration in 2017 was met with a 0.34% gain for the index. The S&P 500 rose 1.39% on the day Joe Biden was sworn in as president, the largest inauguration gain for the index since Ronald Reagan's second inauguration in 1985. Longer term, the index has logged an average decline of 0.27%, according to data going back to 1949. For the Dow Jones Industrial Average, the average decline is 0.24%. The Nasdaq Composite, which was launched more recently, has logged an average decline of 0.35%.

The following table shows percentage changes for inaugurations from President Harry Truman on:

| President | S&P 500 change | Nasdaq (%) | Dow Jones (%) |
| --- | --- | --- | --- |
| Joe Biden | 1.39 | 1.97 | 0.83 |
| Donald Trump | 0.34 | 0.28 | 0.48 |
| Barack Obama (2nd term) | 0.44 | 0.27 | 0.46 |
| Barack Obama (1st term) | -5.28 | -5.79 | -4.01 |
| George W Bush (2nd term) | -0.78 | -1.34 | -0.65 |
| George W Bush (1st term) | 0.03 | -0.45 | -0.09 |
| Bill Clinton (2nd term) | 0.07 | 1.13 | 0.16 |
| Bill Clinton (1st term) | -0.4 | 0.09 | -0.43 |
| George HW Bush | -0.09 | 0.15 | -0.17 |
| Ronald Reagan (2nd term) | 2.28 | 1.28 | 2.77 |
| Ronald Reagan (1st term) | -2.02 | -1.42 | -2.09 |
| Jimmy Carter | -0.85 | na | -1.00 |
| Richard Nixon (2nd term) | -0.48 | na | -0.72 |
| Richard Nixon (1st term) | 1 | -0.33 | -0.46 |
| Lyndon B. Johnson | -0.035 | na | -0.11 |
| John F. Kennedy | 0.32 | na | 0.31 |
| Dwight D. Eisenhower (2nd term) | 0.5 | na | 0.36 |
| Dwight D. Eisenhower (1st term) | 0.5 | na | 0.36 |
| Harry S. Truman | 0.39 | na | 0.17 |

The table shows a mixed bag of results, with some inaugurations resulting in gains and others in losses. The average decline for the S&P 500 is -0.27%, with a median decline of -0.04%. The median decline for the Dow Jones is -0.11%, and for the Nasdaq, it is 0.15%.

In conclusion, while there is no clear pattern of market performance on inauguration days, investors should remain focused on the longer-term fundamentals that drive market trends. The market's reaction to a new administration's policies and expectations can influence short-term market fluctuations, but ultimately, it is the economic fundamentals that determine the market's performance. As we watch the markets today, it will be fascinating to see if this trend of gains continues or if history repeats itself with a decline.