Traders work on the trading floor of the New York Stock Exchange.
New York Stock Exchange
History shows that stocks typically rise after presidential elections, but investors first need to prepare for short-term volatility.
In presidential election years since 1980, the three major benchmarks have risen on average between Election Day and the end of the year, according to CNBC data. However, investors shouldn’t expect markets to skyrocket after the polls close.
S&P 500 post-election
| election date | the day after tomorrow | a week later | a month later | end of the year |
|---|---|---|---|---|
| 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 indexes fell on average in the trading days and week following voting day. Stocks tend to erase most or all of their losses within a month, CNBC data shows.
That means investors shouldn’t expect immediate gains on Wednesday or in the coming days.
Dow Jones after the election
| election date | the day after tomorrow | a week later | a month later | end of the year |
|---|---|---|---|---|
| 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 presidential race, which is considered to be a close one, may not be decided on Wednesday morning. The U.S. may also have to wait for close congressional races to determine which party controls the final vote count in the House of Representatives.
Nasdaq Composite Index Post-Election
| election day | the day after tomorrow | a week later | a month later | end of the year |
|---|---|---|---|---|
| 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 for the next catalyst in financial markets,” said Amy Ho, executive director of strategic research at JPMorgan Chase. “We warn that uncertainty about the outcome is likely to persist as the timetable for certifying election results could take days for the presidential campaign and weeks for the House campaign.”
The election comes amid a strong year for stocks, driving the broader market to record highs. The gain in 2024 is about 20%, the best performance in the 10 months before a presidential election since 1936, according to Bespoke Investment Group.
