02 October 2016
Election Year Stock Market Watch: What Happened in the Past Elections?
Historically, the performance of our US stock markets has been watched, measured, feared and cheered every election year. While the past may be interesting and helpful in understanding the whole picture of our historical election year returns, it can’t be viewed as the way that things will go tomorrow. Make no mistake, the election year market returns history is definitely a great place to start in watching the markets during this election cycle! In November of every election year, three major leadership decisions are being made by American voters. We decide on our US President, Vice President and the US Senate. History shows us that as there are shifts in the political party among the President/Vice President team we see downward trends in the gains of the S&P 500 Market Index. Taking the last 5 elections into account, the following chart shows a 20-year post-election market performance trend. This chart shows that when the incumbent president party won the election there was an upswing in the S&P 500 for the year. There was an S&P 500 loss for the year if the incumbent presidential party did not prevail. If this trend carries over to the 2016 election, we will see a 2016 market upswing with a Clinton victory and a market downswing with a Trump presidential win.