Time-Honored Market Election Signal on Verge of Turning on Trump
- S&P 500 has shown prescience in predicting election outcome
- Theory is that stock drop points to lower odds for incumbent
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It’s a fool’s errand trying to find an election signal in a stock market roiled by a global pandemic, but investors will take any edge they can get. One such indicator is flashing a warning for Donald Trump’s chances on Nov. 3.
The sharp equities selloff over the past few days doesn’t bode well for the incumbent party, if history is any guide. Since 1928, the S&P 500’s performance in the three months leading up to the presidential election has correctly signaled who will win 20 out of 23 times, according to data compiled by Strategas Research Partners LLC. When stocks gain during that span, the sitting party has won 86% of the time.