Economic History End of Trump #1 / Biden Term Market Guide

End of Trump #1 / Biden Term

Track SPY volatility through the End of Trump #1 / Biden Term from February 2020 through April 2020.

Section: Economics Period: 05/2020-12/2024 Published: 2026-03-07 Updated: 2026-03-07

End of Trump #1, Biden Term 5/2020-12/2024

SPY Up Days
Nov 04, 2020: +2.20%	Sep 09, 2020: +2.02%	Jun 05, 2020: +2.62%	Nov 10, 2022: +5.54%
Nov 30, 2022: +3.09%	Jun 24, 2022: +3.06%	Oct 04, 2022: +3.06%	May 04, 2022: +2.99%
Jul 19, 2022: +2.76%	Oct 17, 2022: +2.65%	Oct 03, 2022: +2.59%	Jul 27, 2022: +2.62%
Oct 13, 2022: +2.60%	Mar 09, 2022: +2.57%	Nov 06, 2024: +2.53%	Apr 28, 2022: +2.47%
May 27, 2022: +2.47%	Oct 28, 2022: +2.46%	Jun 21, 2022: +2.45%	Jan 28, 2022: +2.44%
May 13, 2022: +2.39%	Mar 01, 2021: +2.38%	Oct 21, 2022: +2.37%	Aug 08, 2024: +2.30%
Jan 06, 2023: +2.28%	Feb 25, 2022: +2.24%	Mar 16, 2022: +2.24%	Mar 15, 2022: +2.14%
Aug 10, 2022: +2.13%	Feb 22, 2024: +2.11%	Dec 07, 2021: +2.07%	May 17, 2022: +2.02%
May 18, 2020: +3.15%

SPY Down Days
May 01, 2020: -2.81%	May 12, 2020: -2.05%	Jun 24, 2020: -2.59%	Jun 26, 2020: -2.42%
Sep 03, 2020: -3.51%	Sep 08, 2020: -2.78%	Oct 28, 2020: -3.53%	Sep 13, 2022: -4.32%
May 18, 2022: -4.04%	Jun 13, 2022: -3.88%	Apr 29, 2022: -3.63%	May 05, 2022: -3.56%
Aug 26, 2022: -3.37%	Jun 16, 2022: -3.25%	Aug 05, 2024: -3.00%	Dec 18, 2024: -2.95%
Mar 07, 2022: -2.95%	Jun 10, 2022: -2.91%	Apr 26, 2022: -2.81%	Oct 07, 2022: -2.80%
Apr 22, 2022: -2.77%	Jan 27, 2021: -2.57%	Nov 02, 2022: -2.50%	Dec 15, 2022: -2.49%
Feb 25, 2021: -2.45%	Feb 03, 2022: -2.44%	Jun 09, 2022: -2.38%	Oct 14, 2022: -2.37%
Jul 24, 2024: -2.31%	Nov 26, 2021: -2.27%	Aug 22, 2022: -2.14%	Sep 03, 2024: -2.12%
Feb 17, 2022: -2.12%	Sep 03, 2024: -2.12%	Feb 17, 2022: -2.12%	Sep 29, 2022: -2.11%
Nov 09, 2022: -2.08%	Sep 28, 2021: -2.04%	Jun 28, 2022: -2.01%	Feb 21, 2023: -2.00%

Summary

COVID still regularly affected markets going well into 2021, either due to jumps in infection rates, pauses in reopenings, new variants, or news that effective vaccines were on their way, but most of the effects were short-lived and did not come close to the mania that occurred in March and April of 2020. China in particular was very sensitive to rising infection rates. As a point of historical interest, this was around the time “memestocks” came into popularity, a truly unique phenomenon in history. As the virus continued to become more manageable, another inevitable problem followed in its wake. The absurd quantities of money printed to support markets during the collapse finally came with a cost in 2022; extremely high inflation. Combined with high energy costs that began with the Russian-Ukrainian War, and an extremely hawkish FED, markets were consistently beaten down as the FED dramatically raised rates in order to stall inflation, so much so that many were convinced that another recession was on its way. Most of 2023 was spent fighting over inflation and it wasn’t until 2024 that inflation concerns were replaced with another topic of discussion: AI. That year even featured a pivot by the FED away from hikes to cuts. It was interesting to observe that throughout the entire tenure of Biden his name almost never came up in relation to the persistent volatility present in markets during his time in office. Trump is a statistical outlier, but even Bush and Obama made some comments or active policy decisions whenever markets were deteriorating. In comparison even to the latter two who were much less active in stock market activity, Biden was practically a ghost.

Key Data to Keep Track of:

Virus monitoring
FED announcements and comments, particularly pertaining to inflation
Military Conflicts amongst energy rich nations
Economic Data: Unemployment numbers and inflation
Corporate earnings

2020

May: May 1st (-2.81%), May 12th (-2.05%), May 18th (+3.15%)

Two key things took place on 5/1. First, tech giants Amazon and Apple both plummeted, with the former doing so due to a missed earnings report. Amazon attributed the miss to the rising costs of product delivery during the pandemic, with Jeff Bezos citing the expensive cost of providing workers with protective equipment and COVID tests as a major contributor. Apple dipped after refusing to give any estimates for the current quarter, though it assured that its revenue rose 1% despite the lockdowns in China. The second reason appears to be returning tensions between China and Trump, as just the day before, Trump speculated that the virus had been released, accidentally or otherwise, from a Chinese laboratory. Days prior to that, he complained about China’s delayed response to the spread of the virus, as it had apparently waited around six days before sounding any alarm bells. Regardless, the tensions were cited as the primary reason for the drop that day. On 5/12, markets dipped again, Powell claimed that more work was still needed to support the economy and that downside risks would continue to exist until the virus was under control. Several states began reopening their economies, leading to concerns about a second wave of the virus. Despite all the stimulus that was coming to companies, if doors remained closed, none of it would matter. Dr. Fauci went on air, claiming that a vaccine was essential in stopping the spread, but warned that it would still be sometime before a usable one was made available. He also claimed that more “suffering and death” was due if states reopened their economies too quickly. A series of good news came out on 5/18, following a report from Moderna that all 45 trial patients inoculated with two doses developed coronavirus antibodies, news which, on its own, sparked a rally. Powell, this time on 60 Minutes, claimed that there was still more the Fed could do, and that “we’re not out of ammunition by a long shot.” Hope that the reopening of the economy was on the horizon motivated investors to get back into markets.

June: Jun 5th (+2.62%), Jun 24th (-2.59%), Jun 26th (-2.42%)

6/5 came with an unexpected reversal in the jobs market, with Labor Department statistics claiming that 2.5 million jobs were added in May. The total unemployment rate still remained at 13.3%, the gain defied expectations (8 million additional losses were forecasted) and suggested that economic recovery could still take place quickly. The S&P 500 was now coming close to recovering all of the losses it had sustained due to the virus, the NASDAQ, on the other hand, was nearing record highs, as most tech companies were positioned to both weather and take advantage of the pandemic. China and the US were back to reciprocal bans, this time related to passenger flights, the election season now began in earnest, with Joe Biden criticising Trump’s response to the virus, and Slack, despite posting a 50% gain in first quarter earnings, saw its shares plunge as investors had expected more. Things were seemingly returning to normal. Following a lull in new coronavirus cases, 6/24 came with news that 35,000 cases had been identified the day before, the highest number reported since late April and the second highest on record. With some states only just recently allowing businesses to reopen, some governors began to wonder if it was too early. Companies were anxious to get things operational once more, but uncertainty about what the best course of action was and what the impact would be in either case played the largest role in the sell off. On 6/26, states began to react to the second wave of coronavirus. Texas led the charge, announcing it was reinstating some lockdown measures, which accelerated the losses of that day. Bars across the state were closed down and plans for further reopening were paused until the surge slowed down. Concerns that other states would follow the Lone Star were very real. Big banks were the leader in losses, though that had to do with the Federal Reserve’s decision to temporarily cap Goldman Sachs, JPM, and Bank of America’s dividend payments in order to preserve cash during the pandemic. With the rise in cases, another pause in reopening activities, the future recovery of the economy appeared rather hazy.

September: Sep 3rd (-3.51%), Sep 8th (-2.78%), Sep 9th (+2.02%)

Despite all the anxiety caused by COVID, tech stocks had reached record highs just the day before 9/3. There doesn’t seem to be a particular reason given for the drop that day, the article points to “armchair investors” who mostly speculate in options, causing dealers to hedge their risk by buying puts. “Analysts say dealers have rushed to boost their bets on falling shares in recent days in an attempt to hedge their risks, amplifying the sell-off in technology shares.” It couldn’t help that the Justice Department announced it was planning to file antitrust charges against Google in the next weeks and that state unemployment rates still remained high. Tech stocks continued their slide down on 9/8, the catalyst for the sell-off appears to have still been “at large”, though this time, SoftBank was one of the accused. SoftBank was accused of having a history of “outsized bets” and being a large buyer of options connected to the many rising tech stocks, which helped “supercharge” the tech sector. One bank could not have possibly been solely responsible, so the next best claim was that the rally had “gone too far and too fast”. At any rate, the NASDAQ had entered a correction in just 5 days. Tesla had its worst single one day drop of -21%, after news came out that it would not be added to the S&P 500. US-China tensions reemerged, this time as a result of semiconductor sanctions and data security initiatives to protect American networks from Chinese technology. Oil prices dropped sharply, with most travel activities ending with the close of summer. OPEC also announced it was increasing output. Sentiment shifted just the following day, on 9/9. There doesn’t seem to be any particular reason for the rebound, especially since AstraZeneca announced it was putting its late stage vaccine trial on hold following a serious adverse reaction from one of its participants. Tech companies led the gains, perhaps only because the prices were too good enough to pass up.

October: Oct 28th (-3.53%)

Another COVID related drop. Germany and France announced a news set of lockdowns following a resurgence of the virus, which was occurring in the United States as well. Airline companies and Boeing in particular, sank on the news. The latter announced its fourth straight quarter of losses and announced another 7,000 jobs were being cut. Earnings season was nearing the halfway point, with 40% of companies having released reports and 80% of those beat expectations!

November: Nov 4th (+2.20%)

Election Day proved to be a good day for the market, as based on the election results at that time, Republicans were winning Senate seats and the odds of a Biden administration were being priced in as “unlikely”. Despite both candidates being officially anti-tech (vowing to “rein them in”) tech stocks saw the largest gains. Other sectors, like gun and solar stocks, sold off in anticipation of either a Biden or Trump presidency, respectively. It probably helped that the Senate also promised it would prepare another economic stimulus to pass before the end of the year.

2021

January: Jan 27th (-2.57%)

This day will likely go down in history, as the day that degenerates on r/wallstreetbets actually brought hedge funds down to their knees and caused a ripple effect across the market. Taking advantage of over-shorted companies, namely GameStop and AMC, retail investors were able to inflict such painful losses on hedge funds that, in order to cover their shorts, they were forced to liquidate their long positions to free up capital. In other news, the Fed announced that it was not yet increasing interest rates, which provided some comfort to investors, though not enough to change the direction of the market.

February: Feb 25th (-2.45%)

Bond yields continued to climb, with 10Y Treasury Notes reaching a one year high of 1.614%, rising above the S&P 500 dividend yield which made the Treasury Notes a significantly more attractive investment, without any associated risk. High growth tech stocks were sold off across the board and in the carnage, it was Gamestop that emerged as one of the largest winners of the day, hitting 90% gains at its peak, but closing out with a strong 18% gain for the day. Unemployment claims in the fallout of COVID were down, as were infections. More stimulus packages were in the pipeline and vaccine rollout was occurring at a quicker pace than expected. Moderna shares saw a small jump, following an announcement that it was expecting $18.4 billion in sales from its vaccine in 2021 alone.

March: Mar 1st (+2.38%)

Two key things played a role in the day’s gains: Johnson & Johnson’s COVID vaccine became the third authorized vaccine in the United States and another $1.9 trillion COVID relief package passed the House of Representatives and moved on to the Senate. These developments suggested that taking risks with the market was still worth it, due to the economic outlook for growth still being rather strong and January’s Treasury Note yield concerns were becoming subdued. U.S. Manufacturing numbers also came in roaring, jumping to a three-year high in February, following an acceleration in new orders.

September: Sep 28th (-2.04%)

With the worst of COVID having seemingly passed, the FED began to tighten its bottom-less purse strings. The first order of business was pulling back on bond buybacks, which had been truly enormous throughout the course of the pandemic. On one hand, it was a sign that the Fed believed that the economy was recovering, on the other, investors were concerned about rising energy prices, entrenched inflation, and signs that consumer confidence was slowing. Cheap money was also nice to keep around. Despite its course alteration for bond buybacks, the FED assured it had no plans to increase interest rates, potentially for months or even years. Most companies, aside from the energy sector, reacted poorly in the fallout of this revelation, which most knew was coming.

November: Nov 26th (-2.27%)

A new variant of COVID, Omicron, emerged, inciting fears that another lockdown or slowdown in the economy could take place. A new variant brought the same old anxieties and if things got bad, all predictions for economic turn around go right out the window. Stay at home stocks like Netflix and Peloton managed to buck the trend, but most of the market struggled with the news.

December: Dec 7th (+2.07%)

It didn’t take too long for Omicron fears to subside. Pfizer and BioNTech both announced that three doses of their vaccine were effective at neutralizing the new variant, per their preliminary tests. Many investors were confident that the variant was manageable and so the path to continued growth was guaranteed; another opportunity to buy a dip had presented itself.

2022

January: Jan 28th (+2.44%)

Markets apparently opened red on the day, due to mixed corporate earnings, geopolitical tensions, and FED policy becoming increasingly aggressive. The new year was down -7% on the SPY alone. To make matters worse, consumer spending dropped and consumer sentiment showed the worst reading in a decade. Inflation also came in hotter than expected, which the FED promised it would combat by hiking interest rates. It’s difficult to discern why markets rose as much as they did, given the data that was released. Apple jumped 7% after reporting record iPhone sales and Visa jumped 10% after beating earnings, thanks to increased spending in travel and e-commerce. Apple’s position in both the SPY and NASDAQ is cited as their biggest boost, perhaps investors figured it was a good time to buy the dip, again.

February: Feb 3rd (-2.44%), Feb 17th (-2.12%), Feb 25th (+2.24%)

The largest single factor for the day’s losses can be attributed to Meta, which dropped over 26% following a statement that changes in Apple’s privacy rules (harder to track user’s digital habits) would cost the company $10 billion in ad revenue. Mark Zuckerberg also said the company was struggling to compete with TikTok and Facebook lost users globally for the first time. Investors also seem to have responded poorly to Meta’s plans to spend $10 billion on its augmented reality metaverse project, which it described as a vision for the future of the internet. Social media companies in general were taking a beating, with Twitter, Snap, and Pinterest either missing earnings or selling off in lockstep. Most major tech companies saw sell-offs for a variety of reasons, with Amazon losing over 7% in anticipation of its earnings the following day. 2/17’s fall was triggered by President Joe Biden’s comments that there was every indication that Russia would invade Ukraine in the coming days, comments which seemed to have spooked investors. NVDA dropped over 7% after disappointing earnings, dragging markets with it, and jobless claims rose, contrary to expectations. The war between Russia and Ukraine had only just barely begun by 2/25, but news emerged that Putin was willing to engage in talks to end the war, though he later backtracked from this statement. Inflation was bad, high energy costs were expected as a result of the conflict, but the glimmer of hope that the war could end soon pushed equities upwards.

March: Mar 7th (-2.95%), Mar 9th (+2.57%), Mar 15th (+2.14%), Mar 16th (+2.24%)

By 3/7 it appeared that the war in Ukraine would not be over so soon. Congress began discussing sanctions on Russia, planning to end energy imports and end trade relations. Corporate America also joined in. Financial service providers suspended operations, BP, Exxon, and Shell announced plans to sell off their holdings in Russia, even tech companies like Apple and Microsoft paused sales of its products to Russia. Energy prices jumped on the news of prolonged warfare, but Germany and Switzerland refused to end their relationship with Russian fuel. 3/9 saw a shift in sentiment, largely thanks to an OPEC announcement that production output for oil would be increased, in light of the disruptions caused by the war. Given that stocks had been significantly sold off since the war started, the news created an attractive opportunity to get back into the market. The NASDAQ, for example, was already down 20% from its last high. 3/15 was preceded by a three day slump, and markets went higher in anticipation of the upcoming FED meeting. Oil prices dropped from a peak of $139 a barrel to just under $100. Producer prices went up in wake of higher gasoline prices, but it did not perform any worse than expected. With this in mind, market sentiment was pricing in a 25 basis point increase in rates, a very mellow increase. On 3/16, the FED moved exactly as anticipated, raising rates by 25 basis points. Interestingly, the FED claimed it would aggressively increase interest rates throughout the course of the year, ending the flow of easy money that had come as a result of COVID. Inflation had apparently reached its worst reading in 40 years. Analysts were divided on this stance, with some outright claiming that it would cause a recession. Across the ocean, another series of hopeful comments out of Russia and Ukraine suggested the conflict may soon come to a close, and in China, the government began rolling out even more stimulus to keep markets stable.

April: Apr 22nd (-2.77%), Apr 26th (-2.81%), Apr 28th (+2.47%), Apr 29th (-3.63%)

Earnings season was just beginning on 4/22, and huge misses by HCA (-21%) and Intuitive Surgical (-14%) sent the entire sector plummeting downwards. The FED’s hawkish attitude about interest rates continued to spook investors. Tech earnings were due the following week, but shares were already being sold off in anticipation of diminished growth due to rate hikes. Netflix had already presented dismal earnings a few days before, setting a rather dull tone, especially for a company that had done so well as a “stay at home” stock. Concerns about tech company performance was justified on 4/26. Google announced a huge 8% drop in profits, signalling an end to the boom it had experienced during the pandemic. Microsoft, funnily enough, announced profits rose 8%, but this was not enough to swing markets away from a sell-off. Robinhood announced it was laying off 9% of its workforce, GM’s profits fell by 3%, and Jerome Powell was renominated by the White House to remain as Fed Chair. There doesn’t seem to be a clear cut reason for why the selling that day was so drastic, but aforementioned anxieties about interest rate hikes and renewed lockdown measures in China seem to have been enough.

4/28 gains can largely be attributed to Meta, which posted better than expected earnings. Apple and Amazon both rallied that day as well, as both companies were due to report the following day. GDP numbers also came and were decidedly bad. The Commerce Department announced that its advance GDP estimate fell at a 1.4% annualized rate in the last quarter. The earnings hype seems to have quelled the news. On 4/29, Amazon, which had run up just the day before, received a brutal sell off after missing earnings expectations, which were admittedly sky high, largely in part to how successful the company was during the COVID pandemic. Shares fell over 14%, the largest drop since 2006, and dragged the market down with it. Apple also dropped, though only 3.6%, despite achieving record profits and sales, which was attributed to a disappointing outlook. A FED meeting was due the next week and rate hike was expected, adding no shortage of stress. Making matters even worse, the personal consumption expenditure price index, was up again, rising from 0.5% in February to 0.9% in March. This index is one of the FED’s preferred measures of inflation; more hikes were practically guaranteed.

May: May 4th (+2.99%), May 5th (-3.56%), May 13th (+2.39%), May 17th (+2.02%), May 18th (-4.04%), May 27th (+2.47%)

On 5/4, the FED’s rate hike came in as expected, a 50 basis point increase. It isn’t particularly clear why shares gained as much as they did in the wake of the news and a good chunk of the article discusses the many concerns about economic growth; war in Ukraine, lockdowns in China, service sector and hiring slowdowns. Shares of Lyft crashed 30%, due to active rider numbers missing expectations, though revenue had gone up 44%. Starbucks and Livent both saw considerable gains after beating profit expectations and a very hopeful outlook for Livent. 5/5 seemingly answered the senseless response of the market the day before, with fears about the FED continuing its rate hike policy for the foreseeable future leading to a significant sell off. The change seems to have come after traders began to expect a 75 basis point hike, which Powell had explicitly ruled out just the day before. All members of the MAG7 dropped at least 4% and the aforementioned economic stressors reared their heads again. The week leading up to 5/13 was a brutal one, with multiple economic reports suggesting inflation had reached its peak in March, a small relief for investors who still hoped that inflation could be handled without aggressive rate hikes. Almost all the companies of the SP500 had finished reporting, with 78% of them beating expectations. In other news, shares of Twitter dropped 9% after Musk put his buyout bid on hold, pending information concerning fake accounts. Robinhood shares jumped 25% after (the now infamous) Sam Bankman-Fried revealed a 7.6% stake in the company, an admittedly huge one.

5/17 saw two sets of goods news, U.S. retail sales rose in April and March numbers were revised higher, which suggested that consumers were not being “broken” by inflation. In China, COVID related lockdowns were finally being eased. Markets in Asia rebounded on the news, which was followed by American and European markets. The good news was crushed on the following day, 5/18 and all it took was Target missing an earnings report. The company’s profits fell by a whopping 50% and the company warned that it expected even worse margins due to increased logistics costs due to high oil prices. Despite the grim news, shares “only” fell 25%, which was Target’s worst session since 1987. The profit drop was so bad that faith in retail sales numbers was considerably shaken, and if retailers were taking such a hit, worries that inflation had spiraled much worse than expected had begun to take hold. Powell also vowed to raise rates as high as needed in order to kill inflation, which did not help. 5/27 came with fresh news that inflation may have peaked and that the FED could manage a tighter monetary policy without tipping the economy into a recession. Consumer spending numbers came in better than expected and FED minutes reaffirmed the bank’s position on reining in inflation while also being responsive to economic data. The prior week had seen a lot of buying, thanks to upbeat earnings guidance as earnings weeks closed out, with Ulta and Dell both beating expectations and providing optimistic guidance. Inflation was seemingly under control.

June: Jun 9th (-2.38%), Jun 10th (-2.91%), Jun 13th (-3.88%), Jun 16th (-3.25%), Jun 21 (+2.45%), Jun 24th (+3.06%), Jun 28th (-2.01%)

6/9 brought the inflation jitters back with it. The sell-off began in Europe, after the ECB announced it would increase interest rates for the first time in over a decade and that it would halt its bond-buying program. Stateside, a highly anticipated U.S. inflation report was due the following day (which was expected to show rising inflation) and expectations were high that interest rates would go up another 50 basis points. The general feeling that central banks were more concerned with fighting inflation than maintaining market sentiment proved to be a rather unpleasant one. A small uptick in unemployment claims also did little to help. The worst case scenario took shape on 6/10, as consumer prices came in higher than expected. The CPI had jumped 1.0% in May, following a 0.3% gain in April. Analysts had predicted a 0.7% increase. It was now guaranteed that a halt in hikes was off the table and further hikes were already being priced in months out in order to combat spiraling inflation. The macro environment was so poor that even Netflix was downgraded to “sell” from Goldman. The next week came on 6/13, with markets across the world were substantially down before trading even began. Inflation data from the last close was seemingly too much to bear and many investors were looking for a quick exit. The end of the trading day came with rumors that the FED was planning its largest interest rate increase (75 basis points) in decades, in an attempt to combat inflation. China made matters worse with a renewed risk of COVID lockdowns in Beijing. By the end of the trading day, the S&P 500 was officially in a bear market.

Another plunge on 6/16. The FED issued its 75 basis point increase just the day before, which actually saw markets snap a losing streak. New rate hikes in Switzerland and Great Britain reignited fears that the war on inflation and resultant rate hikes, would slow growth or lead to a recession. Why this observation was delayed a day is difficult to discern, but the article is clear the hike from Switzerland was a surprise. High growth stocks took the brunt of the beating, as usual, and analysts from Wells Fargo, Deutsche Bank, and Morgan Stanley began to warn of serious recession risks. 6/21 seems to have risen on no particular news and appears to be a “buy the dip” sort of day. Expectations that a recession could be avoided were still fairly high, so many were willing to take the risk at bargain prices. Concerns about the severity of future steps taken by the FED were still present, but after the latest hike, a degree of calm about additional aggressive hikes emerged. 6/24 saw a really big day alongside seemingly bad news. Consumer sentiment fell considerably, though consumer outlook on inflation improving saw a marginal improvement. Just the day before, a slowdown in business activity was also registered. The thinking went that since the U.S. economy was showing signs of slowing down, the odds that the FED would continue piling interest rate hikes was rather low. In addition to that, commodity prices dropped considerably, which would go a long way in keeping inflation low. That backwards thinking unraveled a few days later on 6/28, with a global rout on stocks. U.S. consumer confidence fell substantially, which was primarily attributed to continuous inflation. Oil prices also jumped, following news that both Saudi Arabia and the United Arab Emirates seemed unwilling to increase production. China announced it would continue to relax quarantines, which provided some reprieve, however inflation concerns still dominated the market.

July: Jul 19th (+2.76%), Jul 27th (+2.62%)

7/16 bumped up on news of a weakening dollar (which hit two decade highs in the last week), news which would help many multi-national corporations score more business. The ECB was weighing a 50 basis point hike in order to strengthen the euro, leading to a boom in European markets that followed into Wall Street. The single most hopeful news in America was that the FED was unlikely to resort to a massive 100 basis point hike, following reports that consumers were still strongly spending despite hot inflation. A new earnings season had also been well on its way and 89% of the 48 companies that had released numbers were beating expectations. At the current pace, companies were performing substantially better than they had been in the last 4 quarters. The NASDAQ in particular saw a huge rally on 7/27, but markets in general responded positively to the FED increasing interest rates exactly as expected; another 75 basis point increase. In the following news conference, Powell suggested that rate hikes would slow down from this point onwards and no promises were made for the next meeting in September. Gains in the NASDAQ were also fueled by both Alphabet and Microsoft reporting very strong earnings growth, with Microsoft forecasting continued growth for cloud computing services. T-Mobile also posted a big earnings win, beating expectations and providing a good outlook on subscriber growth numbers.

August: Aug 10th (+2.13%), Aug 22nd (-2.14%), Aug 26th (-3.37%)

The value of the dollar continued to tumble on 8/10, following a July inflation report that showed consumer prices did not rise and that the cost of gasoline had fallen, a welcome slowdown for the average American. Following the report, traders began to price in a 50 basis point cut as opposed to a 75 basis point one. With prices seemingly under control, aggressive rate hike concerns were now being put at ease. Regional FED presidents made it clear that the war on inflation was far from over, with President Neel Kashkari of the Minneapolis Federal Reserve claiming "far, far away from declaring victory and needed to raise rates much higher.” For the time being, markets were happy with any piece of good news. 8/22 saw a broad decline, attributable to concerns about how the FED would continue dealing with inflation in an upcoming meeting in Jackson Hole, Wyoming. FEDWATCH indicated that traders were split between a 50 basis point hike in September, signaling a dovish pivot, or a 75 basis point hike indicating that the FED was willing to take whatever steps it needed to curb inflation, regardless of market impact. The aforementioned meeting also was expected to cover the FED’s plans to reduce its $9 trillion balance sheet, an ongoing process that was expected to further harm market liquidity. Memestock AMC tumbled 42% the day its preferred stock listed for trading and a rival cinema chain, Cineworld Group, warned of a possible bankruptcy filing. The much awaited meeting at Jackson Hole finally took place on 8/26, and the worst anxieties proved to be justified. The comments weren’t too flagrant, all things considered, but suggesting tight monetary policy and “some pain” for households and businesses was not taken well. Powell went on saying "Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions," Not much else seems to have taken place, inflation remained unresolved and the FED was committed to curbing it.

September: Sep 13th (-4.32%), Sep 29th (-2.11%)

Despite the significant rate hikes that took place throughout 2022, inflation numbers were still coming in hot. On 9/13, another consumer price index report indicated tnat inflation had risen considerably more than expected in August, at an annualized rate of 8.3%. These huge numbers were made even worse in the context of the FED having already increased interest rates by 2.25% that year alone. With inflation showing signs of continuous growth, traders began to price in a rate hike as high as 100 basis points in the next meeting. With no end in sight for tightening liquidity, markets reached volatility levels that hadn’t been seen for two years. If the FED continued the way it had been, more damage was sure to come. 9/29 came with more selling, as FED officials provided no insight into whether they planned to moderate or alter its current plans. Cleveland Fed President Loretta Mester said she does not see distress in U.S. financial markets that would alter the central bank's campaign to lower inflation through rate hikes that have taken the Fed funds rate to a range of 3.0% to 3.25%. Some degree of good news came in the form of unemployment benefit claims, which had fallen to a five month low and suggested that labor markets remained strong despite rate hikes. Treasury yields now dwarfed the S&P’s dividend yield, at 1.8%, which proved to be attractive for an essentially risk free asset. Meta announced it was freezing new hires and considering layoffs and CarMax dropped 25% after an earnings miss, attributed to a cut in consumer spending given the state of inflation in the country.

October: Oct 3rd (+2.59%), Oct 4th (+3.06%), Oct 7th (-2.80%), Oct 13th (+2.60%), Oct 14th (-2.37%), Oct 17th (+2.65%), Oct 21st (+2.37%), Oct 28th (+2.46%)

Seemingly bad news on 10/3, Treasury yields dropped significantly due to weaker than expected manufacturing data. Such news would normally be bad for markets as well, but investors began to bet that it would pivot its stance on aggressive hikes. Manufacturing PMI dropped and missed estimates, but just barely indicated that it was still growing and nothing more than a slowdown. In other news, Tesla closed down 8.6% after earnings, largely due to deliveries greatly lagging behind production numbers. Credit Suisse and Citibank began to curb expectations for the final quarter, as well as the following year. Sources began to suggest that OPEC was planning another output cut, the largest since COVID, which was odd considering that oil prices were still high. 10/4 showed more signs that the US economy was slowing down, which led to another tumble in Treasury yield prices. The Department of Labor reported that active job openings had fallen by the most in roughly 2 and a half years, implying that the labor market was cooling as a result of a hawkish FED. The news was by no means good, but hopes remained that the FED would finally ease its aggressive hiking rather than actually halt it, now that the economy was showing signs of a slow down. Good news and a big drop on 10/7. The Labor Department announced that unemployment rates fell to 3.5%, beating expectations of 3.7%. Now that it became clear that the economy was not in dire straits, the FED was very likely to continue its aggressive stance on inflation and there was a 92% probability of a fourth, consecutive, 75 point basis hike on the upcoming FED meeting November 1st. According to Bill Sterling, strategist from GW&K Investment Management; "the labor market is still way too hot for the Fed's comfort zone. The market took the good news of the robust labor market report and turned it into an ever-more vigilant Fed and therefore potentially higher risks of a recession next year." It seems like you can’t have too many people employed! AMD shares also fell 13.9%, after the company revised estimates that were $1 billion lower than previously forecast.

Markets opened red on 10/13, following another set of Labor Department CPI reports indicating inflation continued to rise at 8.2% annualized. Rent prices in particular surged at the highest rates since 1990. Every indication suggested that the FED would continue its policy as it had, but the day’s pivot seems to have been triggered by a feeling that most of the pessimism had already been priced in. Markets had already fallen 5.7% in the past six sessions, so it seemed an appropriate time to buy the dip. No other explanations for the pivot are provided. 10/14 nearly blew the prior day’s gains away, for similarly difficult reasons to discern. The day opened with JP Morgan, Wells Fargo, and CitiGroup all up after presenting earnings. A University of Michigan survey showed rising inflation expectations amongst consumers and suggested that peak inflation had not yet arrived, which seems to have overshadowed the good earnings moving into close. Political and financial turmoil in Britain seems to have trickled down somewhat, but it’s hard to say what role it played. 10/17 opened in the red, following yet another hotter than expected consumer price index reading. This time, SPY prices reached their lowest point since November of 2020, but a reversal was catalyzed by Bank of America earnings beating expectations. They were by no means impressive, but were still better than expected. It seems that the lows of the day provided an excellent buying and short squeeze opportunity, as the BOA earnings were a catalyst, not a reason.

An overall green day on 10/21, but not without hiccups. The news that investors had been waiting for from the FED had finally come; multiple officials began announcing their desire to slow down the pace of rate hikes and plans for a much smaller rate hike in December. Another 75 basis point hike was still expected in November, but investors had some reprieve that future hikes would not be so brutal. Aside from this, Snapchat dropped 28% after earnings, with its weakest revenue growth in five years, something that was largely blamed on inflation and advertiser cuts. American Express and Verizon also missed earnings expectations, but were only slightly affected in terms of price. Oil producers in general were doing well thanks to high oil prices, Schlumberger gained 10% after an earnings beat. Just a few days before the next FED meeting, on 10/28, markets saw a big gain, largely thanks to strong consumer spending numbers and easing wage growth was likely appreciated as well. Apple crushed earnings and went up 7.6%, whereas Amazon dropped 6.8% after an earnings miss. Chevron and Exxon Mobil also both beat expectations, thanks to strong oil prices. Traders were expecting a 75 basis point hike and seemed confident to bet on the market despite the continuous jumps.

November: Nov 2nd (-2.50%), Nov 9th (-2.08%), Nov 10th (+5.54%), Nov 30th (+3.09%)

Expectations were met on 11/2, as the FED announced another 75 basis point hike, but the real kicker appears to have been Powell’s comments, which amounted to him saying it was too soon to speculate over a pause in rate hikes. Predictably, markets fell considerably in light of continued uncertainty over how far the FED was willing to go to fight inflation. Apparently the market was up before the conference began. Markets responded poorly to midterm elections on 11/9, apparently due to Republican gains “appearing more modest than some expected”. Wall Street seems to have really wanted Republicans to firmly take control of both houses of Congress, which, to quote Jay Hatfield of Infrastructure Capital Management; "I think we were in a unique situation where the more the Republicans won, the better off the market would have been. At least there would have been some stocks strongly rallying, like defense and energy stocks." Instead, clean energy stocks rose a bit. In other news, Disney dropped 13%, its largest one day drop since 2001, after announcing still more losses in its transition to video streaming. Tesla also took a huge 7.2% drop after Elon Musk disclosed he had sold $4 billion worth of shares days after closing the Twitter buyout. Another inflation report was due the next day, so much of the selling was attributed to jitters as well. 11/10 came with a much needed reprieve for markets; the largest single day gains in over two and a half years and inflation had finally cooled down a bit. The Labor Department reported that the consumer price index had fallen below 8% annualized for the first time in eight months. Markets immediately priced down the next rate cut and hope returned that future hike plans wouldn’t need to risk pushing markets into a recession. Just about every stock exploded on the news and despite there being concerns that the gains may have been overdone, the good news was much appreciated. More good news on 11/30. Despite claiming that there still existed a good amount of uncertainty over how inflation would be managed in the future, Powell claimed that future rate cuts would be much softer, presumably thanks to inflation data coming in at more manageable levels. Further enticing investors must have been news from Amazon, announcing that despite high inflation, the past Thanksgiving weekend was the biggest ever shopping weekend it had recorded. GDP data was revised upwards, though a jobs report came out weaker than expected, perhaps inspiring confidence that the FED would further ease its tampering with rates.

December: Dec 15th (-2.49%)

The FED hiked rates by 50 basis points the day before, but once again, comments from the FED maintained that it was not yet satisfied with inflation. It projected it would continue increasing rates throughout 2023, with a target of 5%, rates which had not been seen since 2007. In Europe, both the Bank of England and the ECB committed to extending their rate hiking cycle as both struggled with managing inflation. Making matters worse was a worse than expected decline in retail spending, but unemployment filings fell.

2023

January: Jan 6th (+2.28%)

The simple headline of the day was a larger than expected increase in employer payrolls, easing concerns that the FED was pushing markets into a recession. Wage gains had slowed down as well, but this was presumably appreciated by companies. Markets were content that the FED had seemingly struck a balance between stifling inflation and ensuring that the economy remained active. Memestock Bed Bath & Beyond dropped 22% after news came out it would begin to seek bankruptcy protection.

February: Feb 21st (-2.00%)

Another good news is bad news day on the market. Investors interpreted a rebound in U.S. business activity as a sign that interest rates will need to stay high for some time before inflation becomes manageable. The Purchasing Manufacturer’s Index returned to expansion for the first time in eight months, suggesting a resilient economy, but inflation numbers were still very far from the FED’s target of 2% inflation. America’s number one home improvement chain, Home Depot, fell 7.1%, after it warned about weaker demand and profit expectations. Walmart also reported earnings lower than expected, attributing it to high inflation of food prices, though shares still managed to gain 0.6%. Retail was seemingly not doing too well.

2024

February: Feb 22nd (+2.11%)

The first highly volatile day attributable to the AI boom, markets rose considerably after Nvidia strongly beat expectations and jumped 16.4% as a result. The company added $277 billion in one day, which became the biggest one-day gain by any company in history, at least up until that point. Another chip maker, Synopsys, rose 6.9% to record highs, after it also beat earnings expectations and provided a hopeful outlook. Electric car companies, on the other hand, did not have a good day, with both Rivian and Lucid tumbling 25.6% and 16.8%, respectively, after providing sales forecasts well below expectations.

July: Jul 24th (-2.31%)

After 356 sessions without a 2% decline, the streak was finally brought to an end. Both Tesla and Alphabet were the first of the MAG7 to report earnings and did so in a disappointing fashion. Tesla dropped 12.3%, its worst day drop in four years, after it announced its lowest profit margin in five years and missed earnings estimates. Alphabet dropped 5% despite beating estimates, due to the company announcing an advertising growth slowdown and high CAPEX expenditures. The rest of the MAG7 dropped alongside the two. Considering how much market capitalization these companies have over the entire American market, any drop ripples across the entire market.

August: Aug 5th (-3.00%), Aug 8th (+2.30%)

Worries that the U.S. economy appeared to be slowing down reared their head on 8/5. The selling began the week before. It was accelerated after an employment report showed a slowdown in hires and shrinking manufacturing activity. FED officials downplayed recession risks, but suggested that interest rates may have been too restrictive. FedWatch now predicted a 50 basis point cut at the next meeting in September. Apple also contributed to the selloff, following a Berkshire Hathaway disclosure that Warren Buffett had cut its stake in the company in half. It took only three days for recession concerns to be cooled down, on 8/8. Simply put, jobless claims had fallen more than expected in the latest week and concerns that the labor market was weakening was seemingly overblown. In other news, Under Armour shares jumped 19.2% in a surprise profit beat and Eli Lilly rose 9.5% after raising its profit forecast thanks to Zepbound.

September: Sep 3rd (-2.12%)

Markets sold off considerably, presumably due to anxiety over upcoming labor market reports. Nvidia dropped 10%, losing $279 billion in a single day, and creating another record for largest single day market value decline. Many of the other MAG7 members saw considerable selloffs. Boeing fell 7.3% after being downgraded by Wells Fargo. Most traders seemed anxious as to how much the FED would cut rates at the next meeting in two weeks, as there doesn’t seem to be much other reason for the sell off.

November: Nov 6th (+2.53%)

Trump’s return to the White House seems to have been very welcome by markets, especially by those in close proximity to his administration. Tesla jumped 15% on the news and Bitcoin hit record highs. In addition to Trump’s win, Republicans also won control of the Senate and were still waiting for results from the House of Representatives. The day was a very simple one in that respect.

December: Dec 18th (-2.95%)

The FED cut rates by 25 basis points, just as expected, but the sell off was triggered by comments indicating that only two cuts were being planned for the following year, despite previously planning four. Powell also made it explicitly clear that it had no plans to hold Bitcoin, despite that stance conflicting with Trump’s plans for a bitcoin reserve. BTC’s price fell about 5% as a result of these comments.

InfoLib

End of Trump #1 / Biden Term

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