As the United States approaches the 2024 presidential election, historical data offers a beacon of optimism for stock market performance. An analysis from Carson Group indicates a reassuring trend in the S&P 500 Index: whenever stocks achieve over 20% growth in a pre-election year, a decline has never been observed in the subsequent election year. This finding is particularly relevant, given that 2023 closed as a robust pre-election year with the S&P 500 surging by over 24.2%.
The data, which reviews data from 1950 to the present, underscores this remarkable pattern. Historical instances where significant gains were recorded during the pre-election years—such as under Dwight D. Eisenhower in 1951 and Ronald Reagan in 1983—were followed by continued positive momentum in election years.
For instance, during Dwight Eisenhower‘s presidency that came into power in 1953, the S&P 500 soared by 26.4% in 1955, leading to a 2.6% gain in the election year of 1956. Similarly, during Bill Clinton‘s administration, a 34.1% gain in 1995 prefaced a gain of 20.3% in 1996. During Donald Trump‘s administration, the S&P 500 recorded 28.9% in his third year and 16.3% in the election year. More recently, under Joseph Biden in 2023, stocks saw a significant 24.2% uptick, suggesting a potential continuation of positive trends in 2024.
These data also apply to the presidency year of Lyndon Johnson in 1965, Richard Nixon/Gerald Ford in 1973, George H.W. Bush in 1989 and George W. Bush in 2001.
Throughout the decades, on average, the pre-election year gains exceeded 27.2%, while election year returns consistently remained positive, with an average return of 11.3%. These insights might offer traders and investors a sense of reassurance as they navigate the election year’s complexities.
While past performance is not a guarantee of future results, this historical consistency provides a hopeful outlook for the S&P 500 in 2024. As the US approaches another electoral cycle, stakeholders may continue to watch these trends closely, balancing historical data with contemporary economic and political narratives.
