Who Will Win the 2024 U.S. Presidential Election? This Surprising Indicator Has Never Been Wrong!
The Presidential Predictor Indicator has a perfect record—accurately forecasting every U.S. presidential election winner since 1984. So, who does it favor this year? In today’s article, we dive into the data to find out!
The U.S. presidential election is more than just an American affair; it’s a global event. One of the world’s most powerful nations will choose its next leader, determining not only the direction of U.S. policy but also its impact on the global stage. Will the next president be a Republican or a Democrat? The answer could set the tone for the next four years.
The stakes are high. The choice of president will shape the U.S. economy, influence stock markets, and drive changes that ripple across the world. You might even see those shifts begin to play out on election day itself – November 5, 2024 – on the NASDAQ and S&P 500 indices. But remember, there are certain specifics of news trading.
The Presidential Predictor Index: Can It Really Foresee the Next U.S. President?
Meet the Presidential Predictor Index – a tool credited to American analysts Yale Hirsh and Sam Stovall in the 1980s. They uncovered a fascinating link between the U.S. presidential election outcomes and the S&P 500 stock index in the three months leading up to election day (from July 31 to October 31).
Did you know…
If the S&P 500 finishes higher at the end of this period than at the beginning, the incumbent party is predicted to retain the presidency. But if the index is lower, the challenging party is poised to take over.
Now, here’s the jaw-dropping part: since 1984, this index has been 100% accurate. That’s right – every single election has lined up perfectly with the index’s prediction. Going back even further to 1928, the accuracy still holds an impressive 87%, with only three exceptions – Eisenhower in 1956, Nixon in 1968, and Reagan in 1980. So out of 24 elections, the index nailed it 21 times.
How did the prediction work out during the last election?
The last time Biden and Trump faced each other, the S&P 500 index was falling on the fateful day of October 31, 2020. It suggested that Trump would not win. And it was right.
At the time of writing, we are less than three weeks away from October 31. So if you want to guess whether Trump or Harris will win the election, compare the July 31, 2024 S&P 500 value to the number it will have on 10/31/2024.
If the S&P 500 is higher at the end of that period, Harris should win according to this prediction model. Otherwise, Trump. Simple right?
How Does the Presidential Predictor Index Work?
The S&P 500 has a distinct behavior pattern over a presidential term. During the first year of a new president, the stock market often lags. It’s typically not until the second half of the term that we see stronger growth, especially as presidents push to stimulate the economy ahead of re-election. After all, a strong economy often translates to happy voters—and a better shot at a second term.
Historically, this theory holds up well. Since 1900, the S&P 500 has grown by an average of 11.5% in the fourth year of a president’s term, with this trend occurring 83% of the time. On the flip side, if the president is heading into a second term, the market often struggles. The index actually declined in the eighth year by an average of 1.2%, showing growth in just 44% of cases.
Where Will the S&P 500 Stand on October 31, 2024? A Forecast with Political Implications
As we approach the crucial October 31 deadline, the S&P 500’s current trajectory suggests good news for the Democrats. So far, President Biden’s term has seen some wild swings: a 26.9% gain in 2021, followed by a 19.4% drop in 2022, and a sharp rally with a 24.2% gain in 2023. The index is up again in 2024, surging nearly 22% as of October 11.
The numbers speak volumes. At the end of July, the S&P 500 closed at 5,522 points and now stands at 5,780 – a 4.7% gain in just a few months. For the Republicans to gain an edge, the S&P 500 would need to drop around 5% by the end of October – a scenario that seems unlikely, barring any major market shock.
While concerns about conflict in the Middle East loom, they have yet to significantly impact the markets. The Biden administration has also been actively working to stabilize the situation, potentially delaying any escalation that could trigger a sharp downturn. And with the earnings season underway, expectations for another round of strong numbers from U.S. companies could provide further support to the index.
While we can expect some volatility as the election nears, a significant 5% drop by the end of October would be a surprise – and a game-changer. For now, the Presidential Predictor Indicator leans in favor of the Democrats, with Kamala Harris positioned as the potential beneficiary of this historical pattern.
News Trading Allowed at Fintokei – Will You Ride the Election Waves?
The U.S. presidential election is just around the corner, and no matter who wins, the stock indices are primed for some serious volatility. At Fintokei, you can trade it all – no restrictions, just pure opportunity. If you’re ready to dive into the year’s most anticipated trading event, we’ve got your back!
