The stock market’s strong rally in the first two months of 2024 bodes well for President Joe Biden’s re-election chances in November, according to Ned Davis Research. Historically, a strong start to the year for stocks has favored incumbent presidential candidates seeking re-election, especially for Democrats.
The S&P 500 has surged nearly 8% so far this year, building on last year’s strong rally driven by factors such as continued disinflation, the outlook for interest rate cuts from the Federal Reserve, and solid economic growth. These positive trends could help boost Biden’s approval ratings, which have been impacted by issues such as elevated inflation, his age, and his stance on international conflicts.
According to Ned Davis Research strategist Ed Clissold, the stock market has typically been weak in the early year of a Presidential election, with a median drop of 1%. However, when an incumbent party wins the election in November, the early part of the year sees an average gain rather than a loss.
Clissold notes that while two months of stock market performance is not a definitive indicator of a Presidential election outcome, it is still an interesting trend to observe. A rising stock market ahead of the November election could indicate a strong economy and improved consumer confidence, providing a potential tailwind to Biden’s re-election chances.
Overall, a better economic backdrop could ultimately help Biden’s chances in the upcoming election. As the stock market continues to perform well, it will be interesting to see how this trend plays out in the months leading up to November.
