Do Trump’s Chances Hinge on a Strong Market or Vice Versa?
“With a rise in social unrest, confusion over the pandemic response, and a highly volatile market, the probability of President Trump holding onto his office has dwindled,” says Jason Goepfert of SentimenTrader. Why? “Whatever one’s political association, there seems to be a clear correlation between re-election odds and the price path of the Dow Industrials,” says Goepfert. He notes, however, that with any correlation “it is hard to know whether it’s just happenstance, or even which one might be causing the other.”
Goeppert looked at the performance of the DJIA for the 100 days before a presidential election. That’s about the time until this year’s election. As the charts and tables below show, prior to a Republican winning, the Dow didn’t suffer a single loss. However, the DJIA showed losses for the six months when a sitting Republican lost to a Democrat. Except for 1932. So, if history repeats itself in 2020, the President and the Wall Street bulls should be praying for a steady increase in the DJIA until election day.