Worst Market Since Reagan Greets Obama Before Election [View all]
By Whitney Kisling and Inyoung Hwang
With only six months before the election, the stock market is giving President Barack Obama the worst returns since Ronald Reagan was seeking a second term.
The Standard & Poor’s 500 Index (SPX) is up 1.3 percent since Mitt Romney’s campaign began 12 months ago, compared with average gains of 12 percent for incumbents who won re-election starting with Harry S. Truman, according to data compiled by Bloomberg. Stocks are also advancing less than the 7 percent minimum enjoyed by George H.W. Bush, Jimmy Carter and Gerald Ford, who lost their bids for a second term. The only one with a worse equity performance heading into the vote was Reagan.
Weakening equity markets after a three-year rally underscore the challenge faced by Obama, who took office during the worst recession in seven decades and has presided over 11 quarters of growth. While share returns do little to foretell presidential contests, the 8.7 percent decline in the S&P 500 since April 2 may be a sign investors are losing confidence in an accelerating recovery even as they anticipate more central bank spending to stimulate the economy.
“Fiscal policy is maxed out,” Wayne Lin, a money manager at Baltimore-based Legg Mason Inc., said in a telephone interview on May 16. His firm oversees $643.3 billion. “In past years, we actually had the budget to be able to do it. We had the economic growth that generated tax revenues to be able to support any kind of fiscal policy. There was a lot more flexibility in enacting fiscal policy in prior years.”