Hidden stock market clues that can predict election results – as experts reveal who they think will win in 2024

With six months to go until the presidential election, the stock market may be hiding clues about who will occupy the White House in January.

Historically, the state of the U.S. economy leading up to elections has been highly correlated with how the country votes.

Investors often look for patterns in how markets have behaved in the past to predict what might happen in the future.

An analysis of the returns of the S&P 500 over the past ninety years shows that in election years in which the incumbent president is re-elected, economic growth is strong in advance.

In contrast, when the incumbent loses, America’s largest companies appear to lose steam, casting doubt on the country’s economy and leadership.

A growing economy could inspire confidence in Biden’s leadership ahead of the election, but the issue of persistent inflation could undermine that.

The performance of the S&P 500 index this year may therefore shed some light on who will win the November election, when incumbent President Joe Biden will be challenged for a second term by Donald Trump.

Currently, it points to a Biden victory as it has risen more than 5 percent in just four months.

‘This specific indicator [the stock market] is trending with the average path for incumbent company wins,” said Courtney Gelman, managing director of brokerage Strategas, which published the study.

She added: “But I note that in elections we look at different market, economic and other factors.

“Some of these, like this chart and the fact that the US has avoided a recession so far, look positive for Biden’s re-election.

“While others, like disposable income growth and Biden’s approval rating, look negative.

“We will be watching these indicators, along with others such as the misery index (inflation and unemployment rates)… and the performance of the S&P 500 over the three-month period leading up to the election, as we approach November.”

She also said they would monitor the price of stocks linked to Trump or Biden.

Thanks to Biden’s support for electric cars, shares in companies that make or are related to electric cars are likely to benefit from additional leadership from Biden. This includes Tesla, Ford and smaller companies such as Rivian.

And during Trump’s first term, the price of private prison stocks soared as Trump expanded incarceration and boosted their revenues.

Prison giants include CoreCivic and the GEO Group. In 2016, Trump’s election victory caused CoreCivic’s shares to rise 43 percent in one day. During the race, rival candidate Hillary Clinton had said she would end federal contracts with private prisons.

Bret Kenwell, an investment analyst at eToro, agreed that the S&P 500’s performance this year also pointed toward another Biden term, but expressed concern.

“The graph is compelling,” he said, but added that he was hesitant to draw conclusions “without a crystal ball.”

‘This year the shares have performed relatively well, thanks to a largely better than expected price American economysolid earnings prospects and expectations the Fed will cut rates sometime in 2024,” he said.

Inflation is eroding the purchasing power of most Americans, which potentially bodes well for Donald Trump. In the photo he leaves the White House with Melania in January 2021

Shares in private prisons rose when Trump won the November 2016 election. Pictured is the Otay Mesa Detention Center, an ICE detention center owned and operated by CoreCivic

A new Biden presidency is likely to boost the prospects and valuation of electric car stocks. President Joe Biden stands next to an electric Ford Mustang Mach-E during a visit to the 2022 Detroit Auto Show

Nevertheless, Kenwell suggested there was still plenty of time for things to change. “We know that several unknown developments could occur between now and November,” he added.

Peter Gallagher, director of Unified Retirement Planning Group in New York, said 2024 has been somewhat different than many previous election years.

“The inflation problem in the United States has not completely disappeared,” he said. As a result, with inflation eroding Americans’ purchasing power, overall consumer confidence is low.

“Even my wealthy clients are more interested in the cost of living – and how much more it costs them to fill their gas tank than it did five years ago,” he said.

“If I were to survey my clients, a good litmus test wouldn’t necessarily say how the S&P 500 is doing because they don’t necessarily look at that that much. It would just be the cost of living.”