Ever since the late-1990s technology bubble burst in 2000, ravaging 401(k) accounts and the retirement hopes of countless investors, news about Wall Street and the stock market has fascinated Americans, and it has rarely been out of the headlines.
But something different happened in 2004.
For much of the year, news about Wall Street slipped into the margins. It wasn't surprising. With the electorate sharply divided, the election was one of the most important political events of our time. And for the greater part of the year most Americans’ computer screens, television channels and radio dials were tuned to its every twist and turn.
Wall Street caught election fever too. Pundits prognosticated about the stock market’s likely reaction to a Kerry win, or a second Bush term. Most said traders prefer a business-friendly Republican president, and wouldn’t take kindly to a Kerry administration, which could rescind tax cuts and squeeze corporate profits. Others worried about how the market might behave if a close election result were to be fought out in court.
The election held the market in limbo for months, and as the campaign moved through the summer, a deepening crisis in Iraq, the beginning of a rate hike cycle and crude oil prices creeping toward record highs added to the inertia. The Dow, which entered 2004 above 10,000, approached Nov. 2 stalled at that key level. Investors were left asking if the next tenant at the White House could do anything to wake up a slothful stock market.
In the end, President Bush’s victory set the market ablaze, and November was the strongest month of the year for stocks. Clarification about the election result eased Wall Street’s torpor, and investors refocused on the important issues facing the market, such as the deficit, energy prices and the declining U.S. dollar — questions that remain for 2005.