Since 1984, during election years, the S&P 500 has generally shown below-average performance from January to October due to the uncertainty surrounding the U.S. presidential election results. However, in November and December, the index has often rebounded, delivering strong returns. This year, though, we’re seeing a reversal of this trend: the S&P 500 has already risen by nearly 21% in the first ten months of the year.
Historically, such a performance has only occurred twice before when the stock market saw gains of over 20%, the last instance being in 1936. Of course, drawing conclusions from such a limited sample is risky. That said, the financial markets appear to have already priced in a favorable scenario for Donald Trump, whose platform includes corporate tax cuts and deregulation—two measures that investors view positively. This anticipation is reflected in the recent rise in interest rates, Bitcoin, and the financial sector.
Tuesday’s election night promises to be captivating, and it will be particularly interesting to see how financial markets respond on Wednesday morning, especially given the strong performance we've seen since the beginning of the year.
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