Here’s How Stocks Have Performed Under Fed Chair Jerome Powell, so Far

Federal Reserve Board Chairman Jerome Powell testifies during a hearing before Senate Banking, Housing and Urban Affairs Committee on Capitol Hill in Washington, on Nov. 30, 2021. (Alex Wong/Getty Images)

For investors who took a break from the market during Thanksgiving week, one of the biggest Wall Street headlines they may have missed was President Joe Biden’s decision to renominate Federal Reserve Chairman Jerome Powell for a second term in the position as the Fed begins its post-COVID-19 pandemic tightening program.

Stocks finished down last week sharply on news of the new Omicron COVID-19 variant, but there’s no question Powell has been very good for investors overall during his time in office.

Powell Good to Invest In, Good for Investors

Last week, LPL Financial Chief Market Strategist Ryan Detrick said there are plenty of reasons for Biden to stick with Powell for another term.

“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?” Detrick wrote.

The SPDR Dow Jones Industrial Average ETF Trust is up roughly 40 percent since Powell took office in 2018, giving Powell one of the best stock market track records of any one-term Fed chair. Stocks historically performed best while Alan Greenspan held the office, gaining 312 percent overall. However, Greenspan was Fed chair for five terms from 1987 to 2006.

Impressive Annualized Returns

On an annualized basis, the Dow has gained 9.3 percent per year under Powell, the seventh-best annualized performance for the market among the past 16 Fed chairs. On an annual basis, stocks averaged just an 8 percent gain per year during Greenspan’s 18 1/2 years in the position.

The Dow averaged a 17.4 percent annualized gain during Daniel Crissinger’s just over a 4-year term as Fed chair that began back in 1923, the best-annualized stock market performance under any Fed chair.

Benzinga’s Take

Stocks have performed extremely well under Powell, but the second term will likely be much more of a challenge than the first one.

Stocks rallied from $6 trillion in stimulus measures and there were emergency interest rate cuts during Powell’s first term, but Powell is hoping the Fed can somehow now eliminate that stimulus and raise interest rates to stave off inflation without giving back all the recent stock market gains.

By Wayne Duggan

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