Advertisement
Markets

How the Stock Market Performed During the Clinton Impeachment

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

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.

Advertisement - Article continues below

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.

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.

Getty Images

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.

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%.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

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

Getty Images

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.

Advertisement

Most Popular

HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020

Recommended

21 Dividend Increases During the COVID Crisis
dividend stocks

21 Dividend Increases During the COVID Crisis

These 21 stocks were doling out dividend increases as the coronavirus crisis accelerated – and as many stocks were cutting or outright suspending thei…
July 3, 2020
The Awkward Relationship Between Markets and the Economy
investing

The Awkward Relationship Between Markets and the Economy

Why is the stock market doing so well during such a rough time? Well, it’s because the stock market and the economy are not the same thing.
July 3, 2020
Closing Bell 7/2/20: Double Dose of Jobs Data Drives Stocks Higher
Markets

Closing Bell 7/2/20: Double Dose of Jobs Data Drives Stocks Higher

The Nasdaq closed the holiday-shortened week at all-time highs after Thursday's data dump showed progress on the American employment front.
July 2, 2020
Is the Stock Market Closed for the Fourth of July?
Markets

Is the Stock Market Closed for the Fourth of July?

Independence Day falls on a Saturday in 2020. As a result, the bond and stock markets are closed for a long holiday weekend. Here's a look at the mark…
July 2, 2020