Making sense of market moves
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We get it—it’s hard to stay calm on the precipice of a major presidential election.
But if it helps, when it comes to the stock market, history shows that politics are more of a blip on the radar than a seismic shift, at least in the long run.
The big picture: The stock market consistently goes up through different administrations, despite the fact that various policies obviously affect different sectors’ growth.
“Starting Nov. 1 of each election year through Oct. 31 four years later [since 1928], the average index price return is a cumulative 34%,” wrote Associate Director of Equity Strategies for Morningstar Research Andrew Daniels.
And since 1928, the S&P 500 is up an average of 0.7% the week of the election, with the market going a more bullish direction 63% of the time.
Schwab Center for Financial Research, with data from Morningstar Inc
Recently, the record has been a bit more mixed.
“Of the six elections since 2000, the S&P 500 was up in three cases by the end of November, and down in the other three,” explained Deutsche Bank macro strategist Henry Allen in a recent note.
So what does matter, if not politics?
Federal Reserve central banking policy, corporate earnings, and the state of the macro landscape matter way more than which party is in charge of the White House in terms of the stock market’s growth.
Fourth-quarter earnings this year are expected to rise over 10%, according to analysts, which is why many have more bullish year-end price targets than ever.
“Regardless of who wins, the sun will still rise tomorrow, and life, commerce, markets, etc… will continue on whether we like it or not,” wrote Chief Investment Officer at Bleakley Financial Group Peter Boockvar bluntly in a note today.
“For those not happy with the result, we’ll at least be one day closer to 2028.”—LB
