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US Strategy Snapshot: Election Outcomes and Market Performance

 

Bottom Line:

With less than a week to go until the US election, the contentious and unusual nature of the campaigns has created a great deal of uncertainty within the markets regardless of who eventually wins. There has been much debate surrounding which party is better or not for US stocks based on our client conversations, particularly given the hyper-polarization of US politics lately. However, we have found through our years of work that the markets tend to go up over time whether a Democrat or Republican is in the White House and it’s ultimately the direction of the economy, not politics, that dictates stock prices. Nonetheless, we thought it would be useful to provide some market performance context for all of the potential scenarios that could occur based on upcoming election results. Our analysis suggests that the oft-feared “blue wave” is not as scary as some investors make it out to be, while a Trump reelection is no guarantee of continued market gains.

Main Points:

  • Regardless of Outcome, When a Republican President Has Been Up for Reelection, S&P 500 Has Posted a Gain, on Average, From the Election Through Year-End

  • Political Odds Continue to Point to Full Democratic Control as the Most Likely Outcome

  • Deciphering Performance in Relevant Reelection Scenarios

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