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Investors worried about the tight race for the White House should relax.
History shows that during presidential election years, November and December tend to be bullish months for stocks.
in the Standard & Poor's 500 index have risen 0.9%, on average, in
November during election years dating back to 1928, according to data
compiled for USA TODAY by Bespoke Investment Group. December has
delivered even bigger gift-wrapped gains, with an average rise of 1.7%,
ranking it No. 1 of all 12 months in years voters go to the polls to
vote for president.
Paul Hickey, co-founder of Bespoke, predicts stocks will close out this year on a positive note.
would expect ... the market to rally following Election Day as some of
the uncertainty from the market is lifted and the poor third-quarter
earnings are digested," he says. Corporate earnings, of course, have
been so-so, with only 62% of companies in the S&P 500 that have
reported topping forecasts, in line with historical trends, Thomson
Reuters data show. But only 39% of companies have beat expectations on
revenue and sales, which suggest demand for goods and services in the
economy remains tepid.
Wall Street hopes that once the next
president is known, whether it be a second term for President Obama or a
first term for Republican challenger Mitt Romney, many unanswered
policy questions related to taxes, Wall Street regulation and health
care will have more clear-cut answers.
Investors also say they
will most likely have a better idea after the election if a grand
bargain will be hatched between Democrats and Republicans in Congress to
resolve the so-called "fiscal cliff." The cliff is a potential
growth-stunting mix of tax hikes and government spending cuts that could
occur Jan. 1 unless Congress acts to avert it.
presidential election should dominate the headlines" this week, Lewis
Alexander, U.S. chief economist at Nomura, said in a client note titled,
Hail to the chief.
The stock market's ups and downs this
year have closely tracked the peaks and valleys normally associated with
the fourth and final year of the so-called "presidential stock market
cycle," Hickey says. There's typically an early-year rally, a spring
setback, a summer rebound and another pullback in the fall, which
normally sets the stage for a post-election rally.
charts from 2012 with historical patterns since 1928, the presidenial
market pattern appears intact. The stock market rallied sharply from the
start of the year through the spring. It then suffered a pullback of
nearly 10% in late spring before rallying into October to fresh
five-year highs, before cooling heading into the vote on Nov. 6.
Friday, the Dow fell 139 points, or 1.1%, to 13,093.16.
of Bespoke, here are a few more November market tidbits of the past 100
years to consider as we go to the polls Tuesday:
• When a
Democrat has won the election, the Dow has fallen 0.7%, on average in
November, compared with a gain of 2.5% when a Republican took the White
• When the incumbent candidate has won re-election, the Dow
has gained 1.3%. But when a Democrat incumbent won, the gain dwindled
to 0.2%. When a challenger to a sitting president has won, the Dow has
• There has only been one time in the past 100
years when a Republican challenger has defeated a Democrat incumbent.
That was in 1980, when Ronald Reagan beat Jimmy Carter. That year the
Dow soared 7.5% in November.