Election 2024: Will Trump or Harris Drive the Markets? A Look at History and What’s Ahead

Edward Mah - Oct 15, 2024

As we look ahead to the possibility of a Trump or Harris presidency, many are wondering: which outcome will be better for investors?

With less than 30 days to go until the Presidential election on November 5, 2024, there’s a lot of speculation about how the markets will respond. As we look ahead to the possibility of a Trump or Harris presidency, many are wondering: which outcome will be better for investors?

While it’s natural to be concerned about political leadership and how it might influence markets, history shows us that the stock market’s reaction to a president isn’t as simple as it may seem. In fact, I believe we can take a look at the past to help us understand what the markets might do this time around.

Let’s start by comparing two very different presidents: Barack Obama and Donald Trump. Both presided over the U.S. economy during times of significant change, and yet the performance of the S&P 500 index under each administration was strikingly similar.

During President Obama’s tenure, which began in January 2009 and ended in January 2017, the S&P 500 index had an annualized return of approximately 13.8%. When you consider that Obama took office during the depths of the 2008 financial crisis, this performance is particularly impressive. His administration oversaw a long period of gradual economic recovery, and the stock market reflected that stability and growth over time.

Fast forward to President Trump’s time in office from January 2017 to January 2021. The S&P 500 delivered an annualized return of about 12.1% during Trump’s presidency. This is also a strong result, despite the volatility that marked his term, which was influenced by several key factors. Trade tensions with China, corporate tax cuts, and the outbreak of the COVID-19 pandemic all had a major impact on market performance, leading to fluctuations that kept investors on their toes.

What I find most interesting is that, despite their vastly different policies and approaches to governing, the S&P 500’s performance under Obama and Trump was quite similar. One might expect that the contrasting leadership styles would lead to wildly different market outcomes, but in reality, both presidencies delivered strong returns for investors. This shows us that while political leadership can have an impact on the market, it’s certainly not the only factor at play.

Markets are influenced by a wide range of variables, including policy decisions, economic conditions, geopolitical events, and, of course, investor sentiment. As investors, it’s easy to get caught up in the day-to-day news cycle, but it’s important to keep in mind that markets are resilient. They adapt to changing conditions, regardless of who’s sitting in the Oval Office.

Looking ahead, I anticipate that we’ll see increased market volatility throughout October as we get closer to election day. Investors may react to potential policy shifts, especially when it comes to economic priorities, regulatory decisions, and tax policies. However, based on current trends, I’m optimistic about the market’s performance going into the end of the year. With interest rates continuing to head lower and the Chinese government actively stimulating their economy, we could be in for a strong close to 2024.

In short, while it’s natural to wonder how the markets will react to the outcome of this election, history suggests that political leadership isn’t the sole determinant of market performance. Regardless of whether Trump or Harris wins, I believe the market will continue to move forward, driven by a combination of policy decisions, economic factors, and global events.