The S&P 500 has gained around 1.5% on average between Election Day and the end of the calendar year, according to data from every presidential matchup since 1980. The 2024 election is poised to join a list of tight races. When looking at just the closest contests — 2000, 2004, 2016, and 2020 — the average performance shoots up to 3.9%.
This trend holds true across postelection time frames. NBC News’ latest polling shows the 2024 contest is between the former President and Vice President as Americans head to the polls on Tuesday. “Very close elections, like the one we have currently, are usually greeted with a market bounce, irrespective of who wins or the policies they introduce,” said TS Lombard economist Dario Perkins in a note to clients.
One key difference when looking at only close races is the next-day and week-later returns. While historical data shows stocks typically gain in these periods, tight election cycles have tended to bring near-term gains.
Tight election boosts stock performance
Perkins pointed to research listing a “resolution of uncertainty” as one reason driving the expectation for gains after the election. However, he also warned that a lack of clarity on who wins can lead to a negative market reaction in the short term. That is something on the minds of Wall Street and beyond this Election Day.
Only some states have changed ballot counting rules to avoid delays in results seen in 2020. Investors have been setting their bets well before polls have started closing. Notably, a stock viewed as a proxy for betting on the Republican nominee’s odds of victory has surged in recent weeks.
With a gain of nearly 20%, 2024 recorded the best first 10 months of a presidential election year since 1936, according to Bespoke Investment Group. The data suggest that investors should consider historical trends of stock market performance in the wake of close elections when planning their strategies.
