History shows that stocks usually go up after a U. S. presidential election. But don't expect a smooth ride right away. The day and week after the election, stocks often drop a bit. Don't worry, though, because they usually bounce back within a month. Let's look at some past elections.
In 2020, the S&P 500 went up by 2. 20% the day after the election. But a week later, it was down by 5. 23%. A month later, it was up by 8. 83%. By the end of the year, it had risen by 11. 48%. This pattern isn't always the same. In 2016, the S&P 500 only went up by 1. 11% the day after the election. But by the end of the year, it had risen by 4. 64%.
The Dow Jones Industrial Average has a similar story. In 2020, it went up by 1. 34% the day after the election. But a week later, it was down by 7. 06%. A month later, it was up by 9. 06%. By the end of the year, it had risen by 11. 38%.
The Nasdaq Composite Index also follows this pattern. In 2020, it went up by 3. 85% the day after the election. But a week later, it was down by 3. 52%. A month later, it was up by 10. 90%. By the end of the year, it had risen by 15. 48%.
So, what does this mean? It means that investors should be ready for some ups and downs right after the election. But in the long run, stocks usually go up.
