While political analysts are working hard to figure out how strong the Republican Party's gains will be in Tuesday's elections, the stock market is likely to advance regardless of the outcome, says Sam Stovall, chief equity strategist at S&P Capital IQ.
"In a mid-term election year, . . . the Stock Traders' Almanac shows that the November through April period has risen an average of 15.3 percent since World War II and has advanced 94 percent of the time," he told
Yahoo.
"[Stocks gain] about 3 percent in October, 2.5 percent in November and then 2 percent in December. So a bit of a downward stair step, but all three months historically have been positive"
As for the short term, the Almanac shows that in the five days before the mid-term elections and the three days afterward, stocks gained an average of 2.7 percent since 1934.
The long term looks good too. "If you wait 12 months, meaning October to October in that third year [of a presidency], the market has risen 17 of 17 times since World War II, gaining an average of 17.5 percent," Stovall said.
"Usually there is an uncertainty running up to that [midterm] election and investors then realize [after the election] that the party in power wants to get re-elected and will try to stimulate the economy further in year three that will bear fruit in year four so they or their party gets re-elected,” said Stovall.
Now that stocks have nearly recovered from their recent plunge, many market participants maintain that equities are on quite solid footing.
"We thought the selloff [earlier in October] was unfounded, and now people are buying into the notion that it wasn't based on any change in the fundamentals," David Lefkowitz, equity strategist with UBS Wealth Management, told
The Wall Street Journal. "It's very good for the stock market."
The S&P 500 index dropped 10 percent from its record high Sept. 19 to its low Oct. 15. It has since rebounded to within 1 percent of that all-time peak.
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