Presidential elections in the U.S. can drastically alter the nation’s direction and economic well-being. While it may not have a direct impact, stock market returns in the year following an election could be affected by its results. According to be US Bank, when the presidency changes hands, the stock market gains an average of 5% in the following year. When the president is re-elected, however, the stock market averages an increase of 6.5%. There is little correlation between the party that holds office and the return on the stock market, but a change in parties could negatively affect the market in the short term. This could be attributed to the uncertainty surrounding a newly elected president’s policy regarding government regulation and other issues that may could affect the profitability of companies.

The results of this year’s election will likely cause a reaction among investors and could significantly impact the stock market’s returns for years to come. While historical trends suggest that a Trump re-election may be better for the stock market in the next year than a Biden election, the actual effect on the market remains to be seen.

-Ryan Peters, Domestic Analyst