Election Day Performance in Stock Markets: Backtest Analysis

The US has two main political parties, with different ideologies and policy directions. It is expected that the party that controls the White House and Congress can have a huge impact on equities markets. But what has been the election day performance in the stock market? What has been the performance after election days?

As with many other sociopolitical events, election periods affect stock market performance. Although forecasting the market is mostly futile, previous tendencies in stock market performance before, during, and after election day can be a good guide. But note that while history can provide valuable insight into the market, it does not make any guarantees.

In this post, we take a look at how elections affect stock market performance. We finish off the article with multiple backtests of the election day (in the stock market – S&P 500).

We start by looking at the midterm elections: