As many of you are aware, we find ourselves in the midst of the election cycle, with today often dubbed 'Super Tuesday'. On this day, 15 different states and 1 territory hold their primary elections to help determine the Democratic and Republican candidates for President. One question that frequently arises is, "How will the presidential election impact the stock market?" While the answer to this question depends on a variety of factors, including the outcome of congressional elections, it's intriguing to examine historical trends to gain insights into what an election year may hold for investors in the stock market.
A glance at the chart below reveals that equity returns have historically been favorable during the fourth year of a first-term presidency, with positive outcomes occurring 100% of the time. It's worth noting that the chart tracks results since 1946, encompassing the terms of 12 different first-term Presidents, including Truman, Eisenhower, Johnson, Nixon, Ford, Carter, Reagan, Bush, Clinton, Bush, Obama, and Trump.
As of March 5, 2024, the S&P 500 is showing a 6% increase year-to-date. Considering the historical data presented in the chart, this suggests a potentially positive conclusion for the stock market amidst what promises to be a captivating election year.
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