Markets have typically performed well after elections, so it’s worth paying attention.
- Over the past 80 years, in the month leading up to presidential elections, the stock market was positive only slightly more than half the time. However, from election day through year-end, the market saw gains in nearly every year, with only three exceptions. Notably, the largest post-election gains occurred in the following years (in descending order): 2020, 1952, 1960, 2004, 1980, 1972, 2016, 1996, 1976, and 1992. This list features both Republican and Democratic victories, highlighting that market direction has often been influenced more by broader economic conditions than by political affiliation.
- For context, here’s a look at market behavior following presidential elections since WWII:
1 Week Later:
- The stock market averaged a decline of about 1% in the week after the election.
- The worst weekly performances were seen after the elections of 1948 (-6%) and 2008 (-15%), while the best came in 2020 (5%), 2004 (3%), and 1996 (2%).
- More than 60% of the time, the market was down in the week following the election.
1 Month Later:
- The stock market typically rose by less than 1% in the month after the election.
- The worst monthly performance followed the elections of 1984 (-4%) and 2008 (-16%), while the best occurred in 2020 (9%), 2004 (6%), and 2016 (5%).
- In contrast to the one-week data, the market was positive over 60% of the time in the following month.
1 Year Later:
- The stock market averaged gains of over 10% one year after elections.
- The worst one-year performances followed the elections of 2000 (-21%) and 1956 (-10%), while the best came after 2020 (40%), 1996 (35%), and 1960 (32%).
- Stocks were positive nearly 70% of the time in the year after elections, with performance influenced by a range of factors beyond just election results.
1 Presidential Term Later:
- The stock market averaged a gain of 61% during four-year terms.
- The worst performances occurred after the elections of 2004 (-19%) and 2000 (-2%), while the best followed 1948 (134%) and 1952 (131%).
- The two worst periods were the only terms with negative growth. Economic trends and market events, rather than election outcomes, were the primary drivers during these periods. Factors like the tech bubble, housing market crashes, and 9/11 impacted negative outcomes, while the post-war economic boom of the 1950s contributed to the substantial gains in those years.
Overall, stocks have shown solid returns under both parties, with economic and financial conditions setting the pace.
*Source: Bloomberg, Edward Jones. All market performance data based on the total return of the S&P 500 index.
