Forget polls; stock market best predictor of presidential elections

Published On Sep 11, 2024, 4:21 PM

The article discusses how the stock market, particularly the performance of the S&P 500 from August to October, serves as a reliable predictor of U.S. presidential elections. Historically, if the S&P 500 rises during this period, the incumbent party tends to win; if it falls, the challenger usually prevails. Current polling shows Vice President Kamala Harris and former President Donald Trump in a close race, but the stock market may offer clearer insights into potential outcomes. Additionally, the Misery Index, which combines inflation and unemployment rates, has been another effective predictor of election results since 1980, with a decreasing index favoring the incumbent party.

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If the Misery Index continues to improve leading up to the election, it may benefit the incumbent, suggesting that investments in sectors like consumer discretionary could perform well as economic sentiment improves.

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