US presidential election - sell in may

S&P 500 Performance in Presidential Election Years

As we approach the US presidential election later this year, it’s important to understand its impact on the stock market. The S&P 500, a key indicator of US market performance, often shows interesting trends during these times. The election not only affects US markets but also has a significant influence on global markets, including India.

Historical data from the past 73 years shows that in presidential election years, there is a 77% chance that the market sees a 3.3% change from April to October. This indicates that from May to October, markets generally perform positively. Interestingly, Indian markets often follow the same trend as US markets, showing a similar upward movement.

Comparison with Non-Election Years

When we look at years that are not presidential election years, the probability of positive market performance drops to 64%. It is even lower during midterm election years. This highlights the significant impact of presidential elections on market behavior, making election years particularly noteworthy for investors.

Strong Market Performance in 2024

This year, the market has shown strong performance. According to research by Net Davis Research and Charlie Bilello, the first 112 trading days of this year have seen a 12.7% return. This is remarkable because it places this year as the 22nd best in terms of price returns from the start of the calendar year, and it’s the only time this has happened during a presidential election year.

Factors Influencing Market Performance

Despite various challenges, the US market has performed reasonably well. Earlier this year, there were expectations of several rate cuts by the Federal Reserve. Initially, six or seven rate cuts were anticipated, which was later reduced to five, then three, and now possibly just one. The commentary from the Fed this week will provide further insights into the economic outlook and potential rate cuts.

Global Market Trends

The Indian market has also been following global trends, gradually moving upwards. With the Indian elections behind us, the focus is now on the US presidential election, which is a major event for all markets. The outcome of this election could bring significant changes, especially if there is a shift in geopolitical strategies.

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