A postelection stock market rally isn’t always the auspicious start that investors—and winning presidential candidates—might think. Stocks are struggling for direction Wednesday but have shaken off a drastic plunge scored in the futures market as Donald Trump’s election victory appeared imminent.
A look back to 1928 at how the S&P 500 SPX, +1.11% has performed between Election Day and Inauguration Day finds that the all-time champion is none other than Republican Herbert Hoover, who was elected to his first and only term on Nov. 6, 1928.
Between then and his swearing in on March 4, 1929 (inauguration was moved to Jan. 20 by the 20th amendment in 1933), the index jumped 13.3%, according to Dow Jones data. Disaster would come a little under eight months later with the Crash of 1929, which stands as a signpost for the start of the Great Depression.
The biggest Election Day-to-Inauguration Day slump followed Democrat Barack Obama’s election on Nov. 4, 2008. Between then and inauguration on Jan. 20, 2009, the index dropped nearly 20%.
Both stats suggest performance has more to do with timing than faith in prospective policies. Hoover was elected as the Roaring ‘20s and its stock-market rally came to a catastrophic end. Obama was elected in the depths of the financial crisis.
Stocks bottomed in March, setting the stage for the current seven-year-plus bull market. The index is up around 265% since the start of Obama’s first term.
“The reality is if the economy is on firm footing and not in a recession (2008) or falling into a recession (2000), most the time the returns have been rather strong for the S&P 500,” wrote analysts at LPL Financial, in a Monday note. “Considering the economy currently is probably the best economy an incoming president has inherited since Clinton in 1992, this could be another plus for equities after this election.”
The charts below show how the market’s stacked up in each postelection stretch since 1928:
Here’s another look at the same data from LPL Financial, going back to 1952:
Out of the 22 presidential elections since the creation of the S&P 500, the index has risen 14 times, or 63.6%, the Dow Jones data shows. On average, the move has been positive but no great shakes, with stocks rising 0.17%. When a Republican is elected, the average change has been a gain of 2.24%, while the average move following the election of a Democrat is a 1.56% decline.
When the party in power changes, the average move has been a decline of 2.97%, while the market has scored an average gain of 2.34% in the period when the same party retains the White House.