Money and politics are messy. Whenever a new administration takes over or a midterm election looms, everyone pulls out a stock market by president chart to prove their party is better for your 401(k). But honestly? Most of those charts are selectively edited to tell a specific story. If you look at the raw data from the S&P 500 over the last century, the reality is a lot more chaotic—and a lot more interesting—than a simple "red vs. blue" debate.
Politics matters, sure. But the market usually cares more about what the Federal Reserve is doing with interest rates or whether a tech revolution is brewing than who's sitting in the Oval Office.
The Numbers Don't Lie (But They Do Surprise)
If you look at a long-term stock market by president chart, you'll notice something right away: the market has generally gone up under almost everyone. Since 1929, only three presidents have seen the S&P 500 end their term in the red. We're talking about Herbert Hoover (the Great Depression), Richard Nixon (stagflation and Watergate), and George W. Bush (the 2008 Financial Crisis).
Everyone else? They mostly saw gains.
Historically, Democratic presidents have actually seen higher average annual returns—around 11% to 15% depending on the timeframe—compared to roughly 6% to 9% for Republicans. But don't go betting your house on that. These averages are heavily skewed by "black swan" events. For instance, George W. Bush’s numbers look terrible because he inherited the Dot-com bubble burst and left during the Great Recession. On the flip side, Bill Clinton’s chart looks like a rocket ship because he happened to be in office during the 1990s tech boom.
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Was it their policy? Or just lucky timing? Usually, it's a mix of both.
Why 2026 is Hitting Different
We’re currently in 2026, which is Year Two of the current presidential term. If you study a stock market by president chart that breaks things down by the four-year election cycle, you'll see that Year Two is notoriously the "grind."
It’s often the most volatile year.
Voters get impatient.
The "honeymoon phase" is over.
Historically, the S&P 500 averages only about a 4.6% gain in the second year of a term. Compare that to Year Three, which is statistically the strongest, averaging double-digit returns as the administration starts "priming the pump" for reelection.
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In early 2025, we saw the market surge by over 15% following the inauguration, but 2026 has introduced new headaches. The ongoing friction between the White House and the Federal Reserve—specifically the public tiffs over interest rate cuts—has investors on edge. When a president tries to lean on the Fed Chair (currently Jerome Powell, whose term ends in May 2026), the market usually flinches. Independence is the "secret sauce" that keeps the dollar stable. If investors think the Fed is becoming a political puppet, they start selling.
The Myths People Love to Believe
You’ve probably heard that "Republicans are better for business." It sounds logical. They generally push for deregulation and tax cuts, like the 2017 Tax Cuts and Jobs Act or the "One Big Beautiful Bill Act" of 2025.
But "better for business" doesn't always mean "higher stock prices."
Sometimes, aggressive trade policies—like the 2025 tariffs that caused a 20% mid-year dip before recovering—create so much uncertainty that even tax cuts can't save the day. Markets hate uncertainty more than they hate high taxes.
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- The "Gridlock" Bonus: Interestingly, the market often performs better when the government is split. If one party holds the White House and the other holds Congress, it's harder to pass radical legislation. Investors love this because it means the "rules of the game" won't change overnight.
- The Sector Secret: A president might not move the whole S&P 500, but they definitely move sectors. A Republican win usually lights a fire under energy and defense stocks. A Democratic win often boosts green energy and healthcare.
What Actually Drives the Chart?
If you want to know where the market is going, stop looking at the person behind the podium and start looking at these three things:
- Corporate Earnings: At the end of the day, a stock price is just a reflection of how much money a company makes. If Apple or Nvidia are printing cash, the market goes up.
- The Fed: Interest rates are the "gravity" of the financial world. Low rates make stocks fly. High rates pull them down.
- The Yield Curve: Keep an eye on the 10-year Treasury. When yields cross 4.5%, stocks usually start feeling the pressure.
Actionable Steps for Your Portfolio
Don't trade based on your politics. It's the fastest way to lose money. I've seen people sit out of the market for eight years because they disliked the sitting president, only to miss out on 100% gains.
Check your diversification. If 2026 stays true to its "Year Two" reputation, we could see a drawdown of nearly 19% before a year-end recovery. Make sure you have enough cash on the sidelines to not panic if your balance drops.
Watch the May 2026 Fed Chair appointment. This is the biggest catalyst for the second half of the year. If the new appointee is seen as a political "yes-man," consider moving some equity into "safe havens" like gold or short-term Treasuries.
Ignore the headlines, look at the earnings. Check the Q1 and Q2 earnings reports for the "Magnificent Seven" tech stocks. If their growth is slowing, the stock market by president chart won't matter—the whole market will catch a cold.
Focus on the cycle, not the person. Stay invested, stay diversified, and remember that the market has survived every president we've ever had. It'll probably survive this one too.