How the Stock Market Performed During the Clinton Impeachment

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How the Stock Market Performed During the Clinton Impeachment

Will Donald Trump's trial disrupt the red-hot rally? History suggests it won't.

The U.S. Senate votes on articles of impeachment and acquits President Bill Clinton on Feb. 12, 1999. Getty Images

Investors might be concerned that the impeachment trial of President Donald Trump, which began Thursday, Jan. 17, could cast a pall over the stock market's recent run to all-time highs.

But if past is prologue, the market will shrug this off. In fact, it might even generate enviable returns.

That's what happened last time, anyway.

As you may recall, President Bill Clinton was embroiled in a scandal of his own that ultimately led to his impeachment by the House of Representatives and a trial in the Senate. That was a bit more than 20 years ago during the peak years of the dot-com boom.

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The height of the Clinton impeachment ran from Dec. 19, 1998, to Feb. 12, 1999 – the date the House approved two articles of impeachment, to the date the Senate announced his acquittal. During that period, the blue-chip Dow Jones Industrial Average gained 4.2%. The broader S&P 500 rose 3.5% on a price basis.

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That's a heck of a return for less than two months of market action.


Interestingly, stocks were no more volatile during the Clinton impeachment. They just chipped in steady gains during what was a heady time for the country.

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During the two-year period of 1998 and 1999, the cyclical bull market was on fire. The Dow rose 45% from the beginning of 1998 to the end of 1999. The S&P 500 jumped 51%.

And as for the tech-heavy Nasdaq Composite, the star of the late '90s tech boom? It gained 159%.

As we now know, irrational exuberance fed an epic bubble in share prices that would pop in early 2000. But there were real underlying reasons for investors to go a little nuts. Namely, the economy was zipping along in high gear. In 1998 gross domestic product increased 4.5%. In 1999, it accelerated to 4.8%.


The economy was as healthy as it had been in a long time, and inflation was around the goldilocks level of 2%. U.S. corporate operating earnings – the mother's milk of share prices – were forecast to grow 16.4% in 1999.

This year’s impeachment trial comes against a somewhat similar backdrop, albeit a more modest one. The economy is growing steadily, though at a slower rate than it was back then. Analysts forecast earnings growth of between 4.5% and 6.5% for the first half of 2020. And inflation is negligible.

Oh, and we're in the midst of the longest expansion and bull market in history.

It likely will take a lot more than some drama in Washington to tank this market.

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