The presidential election is on the horizon, and history shows it could have implications for the stock market from now until November 2024.
The
S&P 500
has been up 4% on average in the 12 months leading up to a presidential election since 1984, according to Goldman Sachs.
That may sound like weak performance—the index is up 9% in the average calendar year—but it can be attributed to a couple of rough years.
The index fell 10% for calendar year 2000, according to Dow Jones Market Data, as markets anticipated a recession in the early 2000s. In calendar year 2008, the S&P 500 dropped 39% heading into the 2007-09 recession.
There also have been some outstanding election years. In 2020, the S&P 500 gained about 16% as former President Donald Trump and President Joe Biden campaigned for the White House.
While the 2024 presidential campaign is still heating up, the economy already appears to be a concern for voters.
In a poll of six battleground states by the
New York Times
and Siena College, 57% of registered voters said economic issues were important when deciding who to vote for in the 2024 election. Also, 81% said the economy was in “fair” or “poor” condition, while 19% rated the economy as “excellent” or “good.”
And in a recent CBS News poll, 18% of likely voters said they would be financially better off if Biden wins, while 45% said they would be financially better off if Trump wins.
Whatever the outcome, the economy is likely to slow down, so the stock market could see one of its rather disappointing election years.
The last few quarters have seen low-to-mid-single digit growth in real gross domestic product, but that is likely to decelerate as the impact of higher rates continue to kick in. Companies are already seeing evidence of weakening demand, as they issue disappointing profit outlooks, causing share price volatility.
It is entirely possible that, like the historical average indicates, the market will post small gains over the next year or so.
Write to Jacob Sonenshine at [email protected]
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