Are Second Terms Good for Stocks?

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A look at markets in the first year of a second term.

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(JEWEL SAMAD/AFP/Getty Images)

If it’s really uncertainty that’s holding back the economy, there’s one less wild card today than there was yesterday. Will President Obama’s newly extended White House lease spur the markets upward? He has, after all, presided over a period of fairly strong equity markets, as indeed have Democrats historically (as we show here). But the end of electoral uncertainty doesn’t always help the market, whose record under returning incumbents is mixed. (Here, by the way, is one measure in which “Republican” markets beat “Democratic” markets: The first year after re-election has produced an average 9.8-percent rise in the Dow under Republicans and an average 1.6-percent decline under Democrats.) Since 1900, White House incumbents have been returned to power 13 times and thrown out four times. Here’s how the market did in the first year after those 13 resumed power.

Next: Year: 1905


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