According to historical analysis, during the 16 quarters of each presidential term since 1950, the best for the S&P 500 index is usually the first quarter of the third year for any president, and now is the time for the market and Joe Biden, according to analysts at Morgan Stanley (NYSE:MS).

Stock market futures – what to expect?

The team of Andrew Simmons, head of Morgan Stanley IM’s Applied Capital Advisory Group, calculated that in the 12 months following the year of the U.S. midterm elections (as it was in 2022), the S&P 500 saw an average 33% gain, and increased each time thereafter. This presidential cycle has been no exception to that pattern, indicating positive potential in this quarter.

Stock market news

Indeed, the market started 2023 on the right note, although some investors may point to a number of data, such as the unexpected January jobs report or February’s inflation figure, that suggest the Federal Reserve may have to tighten the screws even more for a “soft landing.”

“Today, most investors believe that corporate earnings will decline in early 2023 and pull the stock market down with it. While pessimism prevails, I am more optimistic,” said the expert.

His optimism is supported by GDP and employment data, which show that the U.S. economy is fairly resilient, and the leadership of financial, industrial and commodities stocks in recent months also supports his view, as prices of these cyclical stocks often fall before the economy wobbles.

“As inflation continues to improve, the first quarter is likely to be strong,” he said.

But at the same time, the expert was quick to warn: stock market risk, if it occurs in 2023, will occur in the second half of the year, and corporate earnings could fall slowly before then, disappointing market bears. Also, the long-term bond rate has fallen more than short-term bonds, creating an inverted yield curve that often portends an impending slowdown in economic growth.

Earlier, we reported that U.S. stock indices were down 1.3-1.8%.