Since Jerome Powell’s swearing in as the 16th Federal Reserve chair on Feb. 5, the Dow Jones Industrial Average has advanced 4.6%, according to CFRA’s Sam Stovall. That’s not bad, although it places Powell right in the middle, performance-wise.
Powell had the seventh-best market showing for a Fed chair, by CFRA’s estimate. And his gain far outpaces the 0.9% average for all the chairs’ first half-year. The Dow is the best measure here because it has been around since before the Fed opened its doors in 1914. What became the S&P 500, a broader index, began in the 1920s.
Why the middling record? Powell took over amid the winter market correction. Since then, stocks have been inching back. The Dow is still short of its January peak.
To be sure, the link between Fed actions and market performance is not always one of cause-and-effect. How stocks do during a Fed chair’s initial six months, or any time, is more a function of how the economy is faring. The Fed has an influence on that, but it is more of a long-term one.
The best initial six-month market gain (20.9%) came under G. William Miller in 1978, right before inflation got so bad that he was ousted. Second-best (20%) was under Eugene Black, who happened to take over in 1933 during enthusiasm for the new president, Franklin Roosevelt, who vowed to dig the US out of the Great Depression.
The worst market performance (-26.8%) occurred in 1987 when Alan Greenspan became chair. He had the poor fortune of arriving amid a rate-tightening cycle, which was widely blamed for helping trigger the October crash, two months after his swearing-in.
Tags: Federal Reserve, Jerome Powell, Stock Market