November 13, 2024

Just How Bullish Is The Market On Trump's Election Win? To Find Out, Look To The Past

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The SPDR S&P 500 ETF Trust SPY and the NASDAQ Invesco QQQ Trust QQQ have seen impressive gains since Donald Trump‘s election win on Nov. 5.

Wednesday’s AAII Sentiment survey could reveal exactly how bullish the market is on Trump’s second term.

Recent Data: Sentiment has waned slightly since the summer and spring. Investors in 2024 were most bullish in July —52.75% responded as such on July 17.

The Nov. 6 reading of the survey, a day after the election, found 41.5% of participants bullish on the market, slightly higher than 39.5% on Oct. 30. The most recent data point may not be accounting for all the shift in investor opinion.

The next AAII report, set to be released Wednesday, could paint a fuller picture of investors’ reactions to Trump’s win.

Historical Data: Following Trump’s win in 2016, investor confidence markedly increased. The percentage of respondents bullish on the economy catapulted from 23.64% to 49.89% in the three weeks following the election. This elevated bullishness subsided in the following months.

Investors were seemingly happy when Trump lost reelection to Joe Biden in 2020 — investor bullishness rose from 35.29% to 55.84%.

An opposite effect was observed during Barack Obama‘s election wins over Mitt Romney in 2012 and John McCain in 2008. Investors became more bullish following George W. Bush‘s 2004 election win against John Kerry.

Why it Matters: Trump’s second administration is seen by many traders as a boon for the stock market.

The promise of deregulation and lower tax rates for corporates could be two tailwinds for big businesses, though his embrace of oil and protectionist trade policies have already hurt certain stocks.

Economists warn that American consumers, especially low-income families, will also end up paying more for everyday goods.

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