The connection between US elections and market performance The connection between US elections and market performance The connection between US elections and market performance

The connection between US elections and market performance

US Election 2024
Peter Garnry

Head of Saxo Strats

As we warm up to the US election in November, we wanted to have a look at how presidential elections and equity markets hang together. Do markets affect the election, does the president affect the market, or are the two things completely unrelated? The answer lies somewhere in between.

For this article, we’ve looked at the 13 presidential elections since 1972. This period follows the break of the so-called Bretton Woods system in 1971, which meant unpegging the US dollar from gold, as this fundamentally changed market dynamics. Thirteen elections aren’t enough to establish statistical significance, so any conclusions should be taken with a grain of salt. Further, it is fair to question how much outlier years such as 1980, 1996, and 2008 de- or inflate results, which adds to the point of viewing these conclusions as suggestive at best. Over those 13 elections, 7 have been won by Republicans and 6 by Democrats. Five elections have been won by the incumbent president, 7 have meant a change of the party in power, while one election has seen a new president from the incumbent party in power.

Does the election year impact market performance?

The first question we set out to answer was whether markets perform differently in election years compared to any other year. One could reasonably think the incumbent president would do his best to prop up the economy to look good.

On the surface, this hypothesis does indeed appear true, as the average return for the S&P 500 (not including the reinvestment of dividends) in election years yields 8.7% on average, compared to 7.7% in other years. But, as always, the devil is in the detail. Because due to the concepts of maths, it isn’t feasible to take the average return of election years and compare it with other years. To correct this, we stitch together these 13 years of return data and calculate the combined compounded return during these election years. The annualised return for election years then comes out at 7.8% annualised, which is very close to the compounded return during non-election years, meaning that there isn’t any significant difference.

Does the equity market impact election results?

The next question we could drum up was whether equity performance could say anything about who would win the election. After all, the equity market is one of the best barometers we have on economic sentiment and the outlook for the economy. It sums up the aggregate opinion about the future, and thus a rallying equity market into election day indicates an improving outlook, which in theory should be positive for the party controlling the White House. Here, we looked at the annual return of the S&P 500 in election years with and without a change of the guard.

Based on the above graph, one could make the weak claim that a strong US equity market adds tailwind for the party controlling the White House. However, we cannot conclude that there is any causation between equity market performance and election winners.

Does the equity market favour a party in power?

The final thing we wanted to investigate was whether markets prefer a Republican or Democratic president. To do so, we looked at S&P 500 returns in the year following the election date.

Interestingly, we observe significantly higher returns one year after the election if a Democratic president was elected. However, as for the general premise of this article, it is important not to view this in a vacuum, as these results are to a certain extent the result of outlier years such as 1976, 1996, and 2020.

In conclusion

Based on this analysis, the strongest conclusion is that we haven’t had enough elections since the break of Bretton Woods to conclude anything definitively. Although the data at hand shows that there isn’t any significant difference in stock market performance in election years compared to other years, there is a tendency for the incumbent party to stay in power in years with strong equity performance. Finally, the year after elections, markets have performed better with a Democratic president than with a Republican over this 13-year period, although it seems to be skewed by events unrelated to party politics.


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.