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How Have Stocks Done Under Jerome Powell?

How Have Stocks Done Under Jerome Powell?

November 29, 2021
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The big news this week was Jerome Powell will remain in charge of the Federal Reserve (Fed) for four more years, so we wanted to do a quick blog that looked at how stocks have done while he has been the Fed Chairman.

“There are many reasons for Jerome Powell to lead the Fed for another four years,” explained LPL Financial Chief Market Strategist Ryan Detrick. “But one of the best could very well be that stocks have done quite well under his leadership. Do you really think he’d still be in charge if stocks did poorly under him? Probably not is the answer there.”

As shown in the LPL Chart of the Day, the Dow has gained 40% under his leadership, ranking him 8th (near the middle of the pack) when compared with all 16 Fed Chairpersons. Interestingly, he ranks just beneath both of his predecessors in Ben Bernanke and Janet Yellen. With four more years to go, you’d have to like his chances there, but Alan Greenspan’s record of 312% is likely safe for the time being.

View enlarged chart.

Here are some more Fed Chair fun facts (using the chart below).

  • On an annualized basis, the Dow has gained 9.3% per annum under Powell, the 7th best out of 16.
  • Interestingly, stocks have dropped under only one Fed Chairperson and that was Eugene Meyer during the Great Depression.
  • Taking another look at Greenspan’s 312% return and we realize he was in charge of the Fed for 18.5 years. So his annual return of 8.0% puts things in perspective.
  • The shortest tenure ever was less than a year and a half back in the late 1970s under William Miller. Meanwhile, the longest ever was William Martin at nearly 19 years.
  • Paul Volker had the best annualized return at 15.2% over his 8 years. Not to mention he handed things over to Greenspan right before the 1987 crash, one of the best handoffs we’ve ever seen in history.
  • Lastly, the Fed has been led by a woman only once and that was Janet Yellen, now in charge of the Treasury. It is worth noting that her four-year run at the Fed produced a very impressive 12.9% annualized return for stocks.

View enlarged chart.

This was a fun blog that also takes a look back at history, we hope you enjoyed it. If you’d like more of our immediate thoughts on the Powell decision, please read Finally Some Clarity on Fed Leadership.

Lastly, and most importantly, we want to wish everyone a happy and safe Thanksgiving holiday!

 

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

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All index and market data from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

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