by Kyle Plotkin
Investment Advisor Representative
[email protected]
As I sit here on Thursday morning ahead of the market open, the S&P 500 is down 8.6% for the year. Market volatility has surged in recent weeks, largely driven by shifting policy signals from the White House.
This week, President Trump walked back his earlier intent to remove Federal Reserve Chair Jerome Powell, following legal scrutiny and growing pressure from Wall Street. Markets responded positively to the news, along with reports that tariffs on most Chinese goods would be reduced from 145%.
In the 94 days since the inauguration, the market has fallen roughly 10%. According to Dow Jones Market Data, this marks the worst start to any presidential term on record, dating back to Herbert Hoover’s election in 1928.
I’ve written before in this space about four-year presidential cycles and historical market performance. Since 1960, Year 3 has tended to show the strongest average returns (16.8%), with Year 2 performing the weakest (3.7%). Year 1 averages a 7.9% return—well above where we stand right now.
The chart below shows the first-year S&P 500 returns for each presidential term since its inception, beginning on Election Day:
Of the past ten presidential terms, only one—George W. Bush’s first, following the dot-com crash—ended its first year in the red. Seven of the ten posted double-digit gains. Will this year finish differently than it started? That remains to be seen and will depend largely on the market’s response to any new policy decisions coming out of Washington. I can’t recall a time when a single individual had such an immediate and outsized influence on market direction.
In the meantime, we’ve made a few defensive adjustments to our portfolios to better navigate the current environment. As always, we’re monitoring conditions closely and will continue to respond as we see fit.
If recent volatility has you feeling uneasy, it may be time to reassess your risk tolerance. Feel free to call the office—we’re happy to talk through your portfolio and help you stay grounded through the ups and downs.
Wishing you a great weekend,
Kyle