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ELECTIONS

How elections move markets in 5 charts

July 18, 2024

How much do elections impact the stock market and portfolio returns? Should elections even matter to long-term investors in the first place? These are the questions investors and financial professionals are facing as we approach November 5.

 

To provide answers, we’ve analyzed more than 90 years of market and election data and identified five ways that elections influence stock returns and investor behavior.

1. Markets have trended higher regardless of which party wins the election

 

Politics can bring out strong emotions and biases, but investors would be wise to tune out the noise and focus on the long term. That’s because elections have, historically speaking, made almost no difference when it comes to long-term investment returns.

 

Which party is in power hasn’t made a meaningful difference to stocks either. Since 1933, there have been eight Democratic and seven Republican presidents, and the general direction of the market has always been up. What should matter more to investors than election results is staying invested.

Sources: Capital Group, RIMES, Standard & Poor’s. Chart shows the growth of a hypothetical $1,000 investment made on March 4, 1933 (the date of Franklin D. Roosevelt’s first inauguration) through June 30, 2024. Dates of party control are based on inauguration dates. Values are based on total returns in USD. Shown on a logarithmic scale. Past results are not predictive of results in future periods.