Presidents rarely pronounce anything surprising in these speeches, but nonetheless they are widely-watched events and many wonder whether the market has a tendency to perform a certain way in the days before and after they are given.

So let's take a look.

The chart below highlights market performance in the days surrounding all of the annual State Of The Union speeches since 1950.

Nothing notable here.  S&P 500 performance was extremely muted in terms of average return both before and after the speeches, with no strong bias either way.  There was a modest bearish tint a couple of days afterward, but nothing excessive.

Now let's look at how it fares with just Republicans:

Performance here was sub-par compared to the others, especially in the days following the speeches.  Three days afterward, the S&P showed a positive return barely 1/3 of the time.

How about Democrats?:

Much better here, at least in terms of how often the market rose.  Three days later, the S&P showed a positive return nearly 70% of the time, a mirror image of performance after Republicans.

Now let's check first-term Presidents, to see if their relative naiveté helps or hurts market performance:

Well, the market really didn't like what many of these first-termers had to say (assuming, of course, we can assign any blame).

Out of 12 first-term State Of The Union speeches, the S&P fell the day following 9 of them.

So what's that say about this week?  Well, hard to say.  Obama gave an unofficial State Of The Union speech last year (included in the chart above), but it was only kinda-sorta on the record.  Officially, his first speech is this week.

Does it count as a first-term speech?  That's up for debate.  Does it matter?  Probably not.  The market is focused on much more urgent business at the moment...unless he puts in some new language about their take on health care or Wall Street regulation.

Jason Goepfert