What generally happens to the stock market after the US presidential election?
Traders work on the floor of the New York Stock Exchange.
New York Stock Exchange
Stocks typically rise after presidential elections, but history shows investors should first prepare for near-term volatility.
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CNBC data shows that in the 1980 presidential election year, the three major benchmarks averaged gains between Election Day and the end of the year. But investors shouldn’t expect markets to rise immediately after the polls close.
S&P 500 After Election
| election day | next day | a week later | one month later | year end |
|---|---|---|---|---|
| November 3, 2020 | 2.20% | 5.23% | 8.83% | 11.48% |
| November 8, 2016 | 1.11% | 1.91% | 4.98% | 4.64% |
| November 6, 2012 | -2.37% | -3.77% | -1.01% | -0.15% |
| November 4, 2008 | -5.27% | -10.62% | -15.96% | -10.19% |
| November 2, 2004 | 1.12% | 2.97% | 5.29% | 7.20% |
| November 7, 2000 | -1.58% | -3.42% | -6.17% | -7.79% |
| November 5, 1996 | 1.46% | 2.16% | 4.23% | 3.72% |
| November 3, 1992 | -0.67% | -0.31% | 2.38% | 3.76% |
| November 8, 1988 | -0.66% | -2.48% | 0.52% | 0.93% |
| November 6, 1984 | -0.73% | -2.61% | -4.49% | -1.86% |
| November 4, 1980 | 2.12% | 1.72% | 5.77% | 5.21% |
| average | -0.30% | -0.84% | 0.40% | 1.54% |
| median | -0.66% | -0.31% | 2.38% | 3.72% |
source: CNBC
In fact, all three indices showed average declines in both the session and week following polling day. Stocks tend to erase most or all of these losses within a month, according to CNBC data.
This means investors shouldn’t expect an immediate rise on Wednesday or the next few days.
Dow after presidential election
| election day | next day | a week later | one month later | year end |
|---|---|---|---|---|
| November 3, 2020 | 1.34% | 7.06% | 9.06% | 11.38% |
| November 8, 2016 | 1.40% | 3.22% | 6.99% | 7.80% |
| November 6, 2012 | -2.36% | -3.70% | -1.30% | -1.07% |
| November 4, 2008 | -5.05% | -9.68% | -12.98% | -8.82% |
| November 2, 2004 | 1.01% | 3.49% | 5.47% | 7.45% |
| November 7, 2000 | -0.41% | -2.48% | -3.06% | -1.51% |
| November 5, 1996 | 1.59% | 3.04% | 5.85% | 6.04% |
| November 3, 1992 | -0.91% | -0.83% | 0.74% | 1.50% |
| November 8, 1988 | -0.43% | -2.37% | 0.67% | 1.93% |
| November 6, 1984 | -0.88% | -3.02% | -5.92% | -2.62% |
| November 4, 1980 | 1.70% | 0.73% | 3.55% | 2.86% |
| average | -0.27% | -0.41% | 0.83% | 2.27% |
| median | -0.41% | -0.83% | 0.74% | 1.93% |
source: CNBC
That’s especially true considering that the hotly contested presidential primary likely won’t be called until Wednesday morning. The United States may also have to wait for tight congressional races to determine which party controls both houses of Congress.
Nasdaq Composite After Election
| election day | next day | a week later | one month later | year end |
|---|---|---|---|---|
| November 3, 2020 | 3.85% | 3.52% | 10.90% | 15.48% |
| November 8, 2016 | 1.11% | 1.58% | 4.31% | 3.65% |
| November 6, 2012 | -2.48% | -4.25% | -0.75% | 0.25% |
| November 4, 2008 | -5.53% | -11.19% | -18.79% | -11.41% |
| November 2, 2004 | 0.98% | 2.95% | 8.00% | 9.61% |
| November 7, 2000 | -5.39% | -8.12% | -19.41% | -27.67% |
| November 5, 1996 | 1.34% | 2.23% | 5.78% | 5.04% |
| November 3, 1992 | 0.16% | 3.83% | 8.56% | 11.97% |
| November 8, 1988 | -0.29% | -1.77% | -0.96% | 0.67% |
| November 6, 1984 | -0.32% | -1.08% | -4.58% | -1.27% |
| November 4, 1980 | 1.49% | 0.97% | 6.75% | 4.76% |
| average | -0.46% | -1.03% | -0.02% | 1.01% |
| median | 0.16% | 0.97% | 4.31% | 3.65% |
source: CNBC
“The election now takes center stage as the next catalyst for financial markets,” said Amy Ho, managing director of strategic research at JPMorgan. “We caution that uncertainty about the results may remain because certifying election results may take days for presidential races and weeks for House races.”
The election comes amid a year in which the stock market has reached record highs. According to Bespoke Investment Group, 2024 was the best first 10 months of a presidential election since 1936, with an increase of about 20%.
