Here’s a history tidbit the average investor didn’t know: The eighth year of a U.S. president's term has been bad news for stocks.
For those without a scorecard, 2016 marks President Barack Obama's eighth year in office. “Which means we should've seen this stock market collapse coming,”
Business Insider U.K. explains.
J.C. O'Hara, chief market technician at
FBN Securities, noted that going back to 1920, the eighth year of a US president's term has been bad news for stocks, Business Insider's Myles Udland reported.
Global equities’ worst-ever start to a year deepened as oil continued its collapse and a slowdown in China weighs on sentiment. About $2.2 trillion has been wiped off the value of U.S. stocks this year through Wednesday, with the S&P 500 down 8 percent,
Bloomberg reported.
“The eighth year of a presidential term has seen the Dow fall about 15% on average since 1920. The two most recent examples are 2000 and 2008, which saw the end of the Clinton and Bush 43 years as well as the collapse of the tech bubble and the U.S. housing market,” the BI report said.
"Of course, years ending in "5" after mid-term elections were supposed to be bullish for stocks, particularly those years that fell during the third year of presidential terms. 2015 saw stocks fall," BI reported.
On Wednesday, the S&P 500 closed at its lowest since October 2014 after touching its weakest level in almost two years,
Reuters reported. However some expect the index to fall even further before the downward trend can reverse. The S&P 500 ended just below 1,860, down 9 percent for the year and 12.7 percent from its record high. To confirm that it is a bona fide bear market, it would have to fall 8.3 percent further to near 1,704.
As for how the current market volatility will influence this year’s presidential election, Sen. John McCain said that the ongoing plunge in U.S. stock markets would hurt the Democrats’ chances of winning the White House in November, just as a market crash did his 2008 bid for the presidency, The
Wall Street Journal reported.
“In our daily tracking, we went from three points up to five points down in 24 hours,” the Arizona Republican said of his standing in the polls when markets went into a free-fall in 2008. In September 2008, McCain suspended his campaign against then-Sen. Barack Obama, saying he needed to get back to Washington to work on a bailout package.
"McCain said that he bore the brunt of public outrage because voters blamed Republicans, since a Republican, George W. Bush, then occupied the Oval Office, But he said that now it is Democrats who are likely to suffer, since Mr. Obama now occupies the White House and is a Democrat," WSJ reported.
“We have a Democrat president,” McCain told WSJ. “People hold presidents responsible.”
(Newsmax wire services contributed to this report).
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