Equities have rallied to record highs since the 2024 presidential election on November 5th. In this article, we examine:
- Is it common for stocks to rally after a presidential election?
- How do equity returns perform over the first 40 trading days after the election?
This study used the S&P 500 index (SPX) as the equity benchmark, which was introduced on February 27, 1957.1
1960 was the first presidential election after the launch of the S&P 500 index. It was also the first presidential election to have a live television debate. Between 1960 and 2020, the U.S. held 16 presidential elections.
The results of the 16 elections show equities rallied 44% of the time the day after a U.S. presidential election, while falling 56% of the time on day 1 (Figure 1). By year-end, stocks rallied 69% of the time from election day.
Figure 1: Post-Election SPX percentage of positive and negative returns for various holding periods from 1960 to 2020
| All Data, N= 16 | |||||||
|---|---|---|---|---|---|---|---|
| 1 Day | 1 Week | 1-Dec | Year-End | ||||
| Pos | Neg | Pos | Neg | Pos | Neg | Pos | Neg |
| 43.8% | 56.3% | 43.8% | 56.3% | 56.3% | 43.8% | 68.8% | 31.3% |
| Excluding 2000, N= 15 | |||||||
| 46.7% | 53.3% | 46.7% | 53.3% | 60.0% | 40.0% | 73.3% | 26.7% |
| Excluding 2000 & 2008, N= 14 | |||||||
| 50.0% | 50.0% | 50.0% | 50.0% | 64.3% | 35.7% | 78.6% | 21.4% |
Source: Bloomberg Professional (SPX), CME Economics Research Calculations
31% (five) of the elections when equities declined included the 2000 election, where the election results were not known until December 13, 2000, due to a very tight race. However, the SPX had been declining since March 24, 2000, as the dotcom bubble burst and reached a bottom on October 9, 2002, for a 49.15% drawdown.
The SPX was already declining amid the financial crisis when the 2008 Presidential election occurred. The SPX peaked on October 9, 2007, and reached a maximum drawdown of 56.78% from peak to trough on March 9, 2009.
When removing the 2000 and 2008 outliers, equities rallied 7 out of the 14 elections (50%) on the first post-election trading day. Equities rallied 11 out of 14 elections, or 79% of the time, by year-end. The 1964, 1968, and 1984 elections experienced an SPX decline by year-end of 0.5%, 2.1%, and 3.95%, respectively.
When examining the 16 presidential elections, the average one-day holding period declined by -0.3%, but the average and median SPX returns are positive by the beginning of December. By year-end, the average and median are 1.9% and 3.6%, as observed in Figure 2. The minimum returns for the four holding periods in Figure 2 are from 2008. The maximum returns occurred in 2020.
Figure 2: SPX Returns for All presidential elections from 1960 to 2020
| 1 Day | 1 Week | Dec 1st | Year-End | |
|---|---|---|---|---|
| Avg | -0.30% | -0.76% | 0.21% | 1.91% |
| Median | -0.30% | -0.20% | 1.38% | 3.65% |
| Max | 2.20% | 5.38% | 8.71% | 11.48% |
| Min | -5.27% | -8.60% | -18.85% | -10.19% |
| Std Dev | 1.83% | 3.46% | 6.70% | 5.37% |
| 2 Std Dev | 3.66% | 6.92% | 13.40% | 10.73% |
| 3 Std Dev | 5.49% | 10.38% | 20.09% | 16.10% |
Source: Bloomberg Professional (SPX), CME Economics Research Calculations
When excluding the two outlier elections of 2000 and 2008, the average and median SPX returns are slightly positive by the end of the seven calendar days. However, the returns are over 3% by year-end. The minimum returns in one-day and one-week were in 2012. The SPX minimum returns on Dec 1 and year-end were in 1984 and noted in Figure 3.
Figure 3: SPX returns post-Presidential elections 1960 to 2020, excluding 2000 and 2008
| 1 Day | 1 Week | Dec 1st | Year-End | |
|---|---|---|---|---|
| Avg | 0.15% | 0.15% | 2.16% | 3.46% |
| median | 0.06% | 0.14% | 2.50% | 3.74% |
| Max | 2.20% | 5.38% | 8.71% | 11.48% |
| Min | -2.37% | -3.39% | -4.45% | -1.86% |
| Std Dev | 1.28% | 2.53% | 3.79% | 3.48% |
| 2 Std Dev | 2.55% | 5.05% | 7.57% | 6.97% |
| 3 Std Dev | 3.83% | 7.58% | 11.36% | 10.45% |
Source: Bloomberg Professional (SPX), CME Economics Research Calculations
Figure 4 displays the results of the SPX returns for the first 40 trading days after the U.S. presidential election for the 16 elections since 1960. Day 0 is the election day starting at a value of 100. Prior to 1984 the market wasn’t open on election day. In which case the prior trading day was day 0.
Figure 4: Value of the SPX over 40 trading days after the Presidential election
Based on the median and average, equites usually begin to rally around day 5 and day 13, respectively. By day 40, the average and median returns are between 2.2% and 3.7%. The grey dotted line in figures 4 and 5 is the average post-election return.
As of day 13, (Nov 22, 2024), for the 2024 election, equities returned 3.23%, outperforming the average and median of 0.09% and 1.64%, but within one standard deviation of the mean. The black dash line represents the 2024 post-election results.
The data in Figure 5 excludes the two outlier years (2000 and 2008). The average and median SPX returns begin to rally day 1 and end day 40 with returns of 3.5% to 4.25% respectively. The 2024 post-election returns as of November 22nd at 3.23% is above the average and median returns of day 13 of 1.98% and 2.04% respectively, but within the one standard deviation of the mean.
Figure 5: Value of the SPX over 40 trading days after the Presidential election (excluding 2000 & 2008)
Some interesting points in the data:
- 1964 maintained positive returns until day 17, when it became negative.
- 1968 peaked at a 5.11% return on day 15 and ended negative.
- 1976 initially experienced negative returns and bottomed on day 6 at -4.16%. On day 23, the returns turned positive.
- 1988 immediately declined. The SPX bottomed at -4.12% on day 6. Day 19, the SPX returns became positive.
- The 2012 post-election returns started negative and reached a bottom on day 7 at -5.25%. It ended with a positive return by day 40.
The results suggest, since 1960, the SPX often rallies post-election as is currently occurring in 2024 (as of day 13). However, post-election, the returns may initially move higher before ending lower or move lower before moving higher. One could describe the positive returns as a “relief rally” once the election result is known.
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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
