Happy Friday! The tech stock sell-off slowed down on Thursday, with the three benchmark indexes closing the day with mixed results.

At 8:30 am ET today, the Fed’s preferred inflation gauge is due. Analysts expect June’s personal consumption expenditures to climbed 2.5% year-over-year.

Today’s edition answers a simple question: Has the stock market performed better under Trump or Biden?

The three charts below may surprise you.

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Tech and small-caps favor Trump

Market history tells us stocks almost always go up, no matter who’s in the White House.

Over the last 75 years, the S&P 500 has finished higher through every presidential term except for Richard Nixon’s second term, which Gerald Ford completed for him, and under George W. Bush, who inherited the dot-com bust and faced the 9/11 terrorist attack. 

With just over 100 days until the November election, the benchmark index under Joe Biden is indeed on track to finish higher than it was on his inauguration day.

He took office as equities were recovering from the COVID-19 shock. 

The index also climbed with Donald Trump at the helm from 2017 to 2021, and he oversaw a sharp crash at the onset of the pandemic. 

He and Biden have both overseen a nearly identical 43% return in the S&P 500 through 885 trading days.

To be clear, stocks are neither the best gauge for the health of the economy nor the success of a president.

However, the majority of Americans hold equities in their retirement accounts, so sentiment does turn higher when stocks do well. 

It’s easier to be optimistic when you have a ballooning portfolio, so it’s taken as a bullish signal for the incumbent commander in chief.

That said, market performance under Trump and Biden diverge once you adjust by market capitalization and sector.

While Biden has presided over investors’ exuberance for Magnificent Seven stocks and artificial intelligence innovations, the technology sector actually fared much better under Trump.

The Nasdaq Composite saw roughly triple the returns under Trump compared to his successor 3.5 years into the term.

Meanwhile, small-cap stocks also performed better under Trump.

The Russell 2000 notched a 10% gain under his presidency, above the 2% seen during Biden’s tenure so far. 

That’s led some analysts to view the July small-cap rotation as one component of the Trump trade.

Now, the gaps in market performance are not necessarily because of Trump or Biden’s policies.

Generally, a Republican White House favors less regulation and lower taxes compared to a Democratic White House. 

Stocks tend to go up in both scenarios. 

In any case, entities like the Federal Reserve have more influence over investors than the president.

A president may like to take credit for a raging bull market, but they are just as likely to shirk blame when equities underperform. 

And even though the person inside the Oval Office doesn’t influence the market that much, the market’s performance can influence investors’ perception of the president. 

Luckily for investors, bull markets have reigned for most of the last several decades.

Comments or feedback? Hit reply to this email or let me know on X @philrosenn.

*At a glance:

Elsewhere:

🌍️ The US economy is still growing. Thursday data showed US GDP hit 2.8% annualized for the second quarter, faster than expected and a jump from last quarter’s 1.4% print. Traders slightly pulled back their bets for a rate cut in September after the data dump, but markets still expect two or three moves lower in 2024. (WSJ)

🚗 Car stocks tanked on Thursday. Ford led the group lower as it tumbled more than 18%. GM and Stellantis also cratered after the companies reported tepid earnings this week. The one standout? Tesla gained more than 3.4% on the day. (CNBC)

🐂 Fundstrat’s Tom Lee is bullish on small-caps. He sees at least another 15% rally for the Russell 2000 coming in August. Investors are focused on a September rate cut, which could open the door to improved borrowing flexibility for smaller companies. The prospect of a Trump 2.0 White House, too, supports his view. (Business Insider)

Rapid-fire:

• Dexcom stock crashed nearly 40% after hours after a brutal earnings report (CNBC)

• Elon Musk is set to discuss a $5 billion invesment in xAI with the Tesla board (Reuters)

• Alphabet stock dipped after OpenAI announced a new search engine, SearchGPT (CNBC)

• The refrigerated-storage company Lineage IPO’d on Thursday with a strong debut (WSJ)

• Nestle stock slumped to its lowest price since 2019 after cutting guidance for the year (Yahoo Finance)

• In a time of 7% mortgage rates, this family secured their dream home at 2.5% (ResiClub)

• Bill Ackman slashed his fundraising target for a US IPO by as much as 90% (FT)

Last thing:

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