The S&P 500 finished down more than 5% during the first 100 days of President Trump's second administration.
Since 1950, the index has achieved this dubious milestone only three other times during the first 100 days of a presidential term.
In all previous cases, the S&P 500 ended the year in negative territory.
Can the past predict the future? Not necessarily. However, sometimes looking back can give insight into what might be on the way.
I bring this up because of something that recently happened in the stock market. The S&P 500(SNPINDEX: ^GSPC) just did something for only the fourth time in 75 years. Here's what history says is next for stocks.
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100-day milestones
Franklin D. Roosevelt moved into the White House in 1933. Ever since, incoming presidential administrations have been graded by how much they accomplish during their first 100 days.
Roosevelt set a high bar. He worked with Congress to pass 15 major pieces of legislation, including establishing new agricultural programs and banking reforms. Nearly three decades later, John F. Kennedy established the Peace Corps in his first 100 days as president. Ronald Reagan saw 52 hostages released from Iran at the beginning of his first presidential term. He also proposed a major economic recovery package for the struggling U.S. economy and survived an assassination attempt.
Fast forward to today. Time magazine just published an article about Donald Trump's second presidential term, titled "The Most Significant First 100 Days Since FDR." The article discussed Trump's Department of Government Efficiency (DOGE). It referenced the president's desires to make Canada the 51st state and annex Greenland and included the second Trump administration's immigration crackdown.
For investors, though, the biggest story of the first 100 days of Trump's return to the Oval Office is the chaos caused by his administration's steep tariffs. Thanks primarily to the uncertainty created by those tariffs, the S&P 500 has tumbled roughly 7% during President Trump's first 100 days back in office. The index has declined by 5% or more during the first 100 days of a presidential administration only three other times since 1950.
History's three strikes
I used 1950 as an initial point because the S&P 500 chart I referenced only goes back 75 years or so. The actual timeline could go back even further. Technically, any date before March 4, 1957, is earlier than the creation of the S&P 500 in its current form. Before then, the index existed but with only 90 companies included.
The predecessor of the S&P 500 fell nearly 6% during the first 100 days of Dwight D. Eisenhower's first presidential term in 1953. The index eventually slipped into a correction. Although it rebounded in subsequent months, the S&P ended the year down more than 5%.
Richard Nixon's second administration began in 1973. The Watergate scandal that ultimately led to his resignation less than two years later was just beginning to gain momentum. The S&P 500 sank almost 10% in the first 100 days of Nixon's abbreviated second term. The index briefly entered bear market territory but finished the year down around 18%.
George W. Bush inherited the aftermath of the dot-com bubble bursting during his first term as president. The S&P 500 sank roughly 7% during his first 100 days in office in 2001. The sell-off worsened before a bounce began. Still, the S&P 500 finished the year down more than 14%.
Any S&P 500 declines during the first 100 days of U.S. presidential terms are the exception rather than the norm. The only other times the index didn't rise during the early period of a presidential administration were a 4.4% drop in 1977 with Jimmy Carter and a 1.6% slide in early 2005 during George W. Bush's second term.
This time is different (maybe)
History shows that the S&P 500 has always ended the year in negative territory when it fell by at least 5% during the first 100 days of a presidential term. Should investors expect a similar result this year? Perhaps. However, a previous sample size of three is practically meaningless from a statistical standpoint.
Also, this time just might be different from the other cases where the S&P 500 fell 5% or more during the early part of a presidential administration. As we've already seen, tariffs can be delayed. They could even be permanently lifted, either by the White House or the federal courts.
The most important thing for investors to learn from our history lesson, though, is that the S&P 500 has always eventually roared back. You could look back 10 or 20 years from now and view the first half of 2025 as an excellent time to have bought stocks.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
