The Market’s Crystal Ball: How Stock Prices Can Foreshadow the Winner of the Presidential Election
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The U.S. is Just 82 Days Away from the 2024 Presidential Election
The U.S. is just 82 days away from the 2024 presidential election. And as polls, pundits, and prognosticators continue their attempts at predicting whether Vice President Kamala Harris or former President Donald Trump will take the White House, there’s one indicator that’s proven to be a very accurate barometer: the stock market.
The Stock Market’s Track Record of Predicting Election Winners
Political analysts and pollsters often rely on other measures of the economy, like gas prices, unemployment, and inflation, to forecast election outcomes. But for more than 90 years, the market’s performance has been highly correlated with who ultimately occupies 1600 Pennsylvania Avenue.
Historical Performance
In the lead-up to Election Day, the performance of the S&P 500 — the benchmark index synonymous with the stock market — has accurately predicted the winner of the U.S. presidential election 83% of the time, according to research conducted by LPL Financial Holdings, the largest financial advisory firm in the U.S.
Exceptions to the Rule
The four anomalies indicated in LPL Financial’s research can in part be attributed to economic and political circumstances particular to those election cycles.
The Outlook for 2024
There is no crystal ball showing who will win the election this November, and polls have proven to be unreliable gauges. Likewise, basing outcomes on the stock market’s short-term performance is hardly a perfect science.
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