What History Tells Us About Market Performance

Just under one month stands between now and Election Day, and for some of us, that day cannot arrive soon enough. Campaigning has hit a feverous pitch with ads flooding the airwaves and candidates being critiqued and reported on nonstop.

With the 2024 Presidential Election fast approaching it is time to take a look at the impact past elections have had on financial markets and if there are any trends that might help us make more informed investment decisions during the next four years.

Many are examining which candidate will have the greatest impact on the economy and capital markets. A popular belief is that Republican presidents are better for financial markets. While this belief holds water leading up to a Republican being named to office, it doesn’t hold true during the Republican term as markets, particularly equities, tend to perform well regardless of which party is in the oval office.

In fact, there have only been two presidential administrations, both Republican, when equities produced negative returns during the entire term – President Nixon (between January 1969 – August 1974) and President Bush Jr, (between January 2001 – December 2008) since the Great Depression. Conversely, there have only been two administrations, both Democratic, that 10-year Treasury total returns were negative during the entire term – President Carter (between January 1977 – December 1980) and President Biden (between January 2021 - present).

Figure 1 - Source: Macrobond

Additionally, equities experienced their best performance under the watch of Democratic presidents as the S&P 500 index posted a +15.2% return during President Clinton’s two terms and a solid +13.8% during President Obama’s two terms. Conversely, Republican President Trump oversaw the best performance for the red party with a +13.7% return.

Figure 2 - Source: Macrobond

There have been 15 Presidents since the Great Depression and of those 15, the S&P 500 index posted double digit returns during eight of the 15 administrations (Figure 2).