In preparation for the upcoming 2024 U.S. presidential election, investors have been examining the historical precedent displaying stock rallies in the year leading up to Election Day. Yet, potential issues have been noted by Saira Malik, chief investment officer at Nuveen, due to trends and a already strong rally which have investors concerned about equities in early 2024. High market volatility, concerns in relation to interest rate cuts and overpriced stocks have all played a part in lessening investor confidence. As the 2024 election approaches, the U.S. political backdrop becomes increasingly contentious, presenting a recipe for heightened market volatility. The potential for a contested election result could further fuel this volatility.
It is noteworthy that during presidential election years, stocks have never posted a yearly decline when an incumbent president ran for re-election, according to John Lynch, chief investment officer at Comerica Wealth Management since 1952. On the other hand, John Lynch points out that the economy and market performance may reveal a candidate’s chances of winning. It is interesting to note that stocks outperform in presidential election years when the incumbent wins as there is a correlation between a strong economy and voter sentiment. Additionally, concerning the election-year market predictions, Lynch stated there has been 24 presidential elections since 1928, and the direction of the index has accurately predicted 20 out of 24 elections.
Therefore, the article acknowledges the unique situation investors are currently facing in the market as they consider the financial implications of a highly contentious approaching presidential election.