Last week, I shared how re-election years often yield strong stock market returns in the presidential cycle. However, recent developments with President Biden withdrawing from the race have raised questions about whether this still qualifies as a re-election year. While that debate is for others to decide, let’s explore how election years affect the stock market regardless of re-election status.
The Good News: Historically, the second half of the year tends to be the strongest for the stock market in election years. Since 1952, the S&P 500 has averaged a 3.0% return by July 22nd of an election year. By year’s end, the average return has grown to 7.3%.
The Bad News: In the past 72 years of presidential elections, the S&P 500 has never been higher on July 22nd of an election year than it was this year. As of yesterday, the S&P 500 is up 16.7% for the year. Only three election years—1964, 1976, and 1980—had double-digit gains by this point.
The Silver Lining: In those three years with double-digit gains by July 22nd, each closed the year higher. While a small sample size, it is still encouraging.
Looking Ahead to 2024: Where will we end 2024? We believe we’ll close the year higher than where we are today, but we anticipate no shortage of market volatility between now and November.
