How the Stock Market Performs After a Presidential Election

Ever wondered how the stock market reacts in the months following a presidential election? History shows some interesting patterns, and while markets are unpredictable, there are some trends we can point to. Let’s break down the typical performance one, three, six, and twelve months after election day.

1 Month Later: The Post-Election Jitters
Historically, the market doesn’t usually make major moves in the month immediately following an election. Investors are still processing the new leadership’s impact, and there’s often a bit of volatility—up or down—depending on how “market-friendly” the president-elect is perceived to be. According to data from S&P 500 averages, the market tends to move up about 1-2% one month after a presidential election, though this isn’t set in stone.

3 Months Later: Settling In
By the three-month mark, the market starts to settle down. Historically, it’s up around 2-3% on average three months after elections, as investors have digested more about the incoming administration’s policies and the transition is well underway. In recent elections, like 2016 and 2020, we saw some strong three-month rallies, with gains of around 6-7% in the S&P 500, thanks to market-friendly policies on tax cuts and stimulus.

6 Months Later: Policy Impact
Around six months in, we often start seeing the real effects of the new administration’s economic agenda. The market has historically trended positive, gaining an average of around 4-5% over this period. However, big promises made on the campaign trail can also introduce volatility, especially if new policies are controversial or facing legislative hurdles.

For instance, after the 2008 election, the S&P 500 rallied nearly 19% six months after inauguration, thanks to aggressive financial recovery efforts. By contrast, in 2000 (Bush’s first term), we saw a 4.2% drop due to tech bubble concerns.

12 Months Later: A Full Year In
One year after a presidential election, the stock market has generally had time to adapt to the administration's priorities and has often rallied. According to historical data, the S&P 500 has posted average gains of about 6-9% over the first 12 months, though this varies widely based on the broader economic climate. For example:

- Obama’s first year (2008-2009) saw a big rally, up about 26%, as markets recovered from the financial crisis.
- Trump’s first year (2016-2017) saw gains of 20%, fueled by tax reform expectations.
- Biden’s first year (2020-2021) also experienced gains of around 20%, boosted by COVID-19 recovery spending.

Of course, not every president’s first year has a smooth ride—factors like inflation, interest rates, and global events can impact performance just as much as who’s in the Oval Office.

Wrapping It Up
Overall, while markets can be volatile immediately after elections, history shows a trend of positive returns in the months that follow. One year in, the market tends to be up, reflecting both policy impacts and broader economic conditions. But remember, these are just averages, and there’s no guarantee—each election cycle brings its own twists, turns, and surprises.