Why Has the Stock Market Risen So Much Since the U.S. Presidential
Election?
ABSTRACT:
This
paper looks at the evolution of U.S. stock prices from the time of the
Presidential elections to the end of 2017. It concludes that a bit more than
half of the increase in the aggregate U.S. stock prices from the presidential
election to the end of 2017 can be attributed to higher actual and expected
dividends. A general improvement in economic activity and a decrease in
economic policy uncertainty around the world were the main factors behind the
stock market increase. The prospect and the eventual passage of the corporate
tax bill nevertheless played a role. And while part of the rise in stock
returns came from a decrease in the equity risk premium, this decrease was
relatively limited and returned the premium to the levels of the first half of
the 2000s.
A Brief History of Equity Bull Markets
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