Can the Dow break 40,000 under Biden?


While stock market indices (^GSPC, ^IXIC) continually break new ground during recent rallies, Wall Street is expecting the Dow Jones Industrial Average (^DJI) to break 40,000 under the Biden administration. Referencing one of President Biden’s tweets from earlier this month, Yahoo Finance Senior Columnist Rick Newman comments on the relationship between Biden’s economic policies and recent rallies, and how stock market fortitude compares to performances seen under the Trump administration.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor’s note: This article was written by Luke Carberry Mogan.

Video Transcript

President Biden looking to take a victory lap over the market’s recent rally. And joining us now is Senior Columnist Rick Newman. Rick.

RICK NEWMAN: Hey, guys. Yeah, President Biden did something unusual for him recently. He bragged about the stock market in a tweet from a few days back. And you have to wonder, is this something that Biden plans to do as the– his re-election campaign heats up here?

His timing is, obviously, good. I mean, we had recently new record highs in the S&P 500 and in the Dow. And if you guys are looking at the same Wall Street research notes I am, you’re starting to see people anticipating Dow 40,000, when the Dow is going to get to the 40,000 mark.

Now as we have discussed many times, these round numbers don’t mean anything special, except they do capture public attention. So when we had Dow 30,000, we had people with the hats, the celebratory hats and said Dow 30,000. It does draw attention to the fact that we do have this stock market rally. And if we get to Dow 40,000, we only need to get about another 1.8% in the Dow to get there.

I think you will hear President Biden bragging about this and trying to take a little bit of credit. I mean, he is, obviously, trying to find every way he can to get people to forget about inflation, which is the main thing that’s bumming people out, and pay attention to the other things that are going well in the economy.

So I think the other day when he said, hey, look at what the stock market is doing, that’s a sign of confidence in the US economy, I think that’s a preview. I think we could hear more of that from him as long as this terrific stock market rally we’ve had for three or four months remains intact.

Of course, the question is, who– you know, who does that help him with? In other words, I would think just off the top of my head that the stock market continuing to rise would do better, would do more for wealthier American sentiment, right? Whereas maybe you could argue the ones who are being the most hurt by inflation are lower income Americans. And that’s who he needs to convince, perhaps.

RICK NEWMAN: Yeah, of course. But, you know, I looked up the latest numbers on how many Americans, what percentage of Americans say they have some ownership of stocks. And it’s now at 61%– 61%.

And if you think about it, that makes sense because pensions have been on their way out for a long time. And what most people have for retirement plan, if you’re lucky enough to have a retirement plan, is a 401(k) plan, which means you probably have investments in stocks. So this is not like it only benefits the wealthy.

And people who do have stock ownership, I mean, they pretty much know what their– how their investments are doing and, you know, their– what economists call the wealth effect, it is a real thing. When your home value is going up or your investment portfolio is going up, you feel better off. And you’re– you might feel more inclined to spend money.

So do people need President Biden to remind them that their investments are doing well? I don’t know. There’s an obvious contrast here to President Trump. Donald Trump, when he was president, he bragged about the stock market when it was going up. He bragged about it like once every 35 hours, according to one study.

I mean, he talked about it constantly. And of course, he said it was going up. It was all because of his great policies. Stocks did tank in– at the beginning of the COVID pandemic in 2020. And then Trump didn’t have too much to stay– say about the stock market.

But if the– if stocks continue on the trend line they’re on, just you know, steady state within a couple of months, Biden will be able to say the stock market under him is doing better than it was under Donald Trump at the same point. And if we get there, I think Biden’s going to go for it for sure.

We’ll see. We’ll see if we continue hear these kinds of tweets and brags from him. Thanks, Rick. Appreciate it.

RICK NEWMAN: Get your Dow 40,000 hats, guys.

Oh, I’m ready.



Read More: Can the Dow break 40,000 under Biden?

2024-02-23 20:48:37

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