Investing 2024: Will the Presidential Election Affect the Stock Market?

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As the 2024 U.S. presidential election gears up, it’s looking more and more like a repeat of 2020’s face-off. With one Republican candidate taking a significant lead, the race is heating up, and it’s got everyone talking about how this could shake up the stock market and the broader economy.

Here’s the thing: every time an election rolls around, there’s a lot of chatter about it being the most critical one ever. Sure, who’s in charge can really change things up in terms of policies and the direction of the country. But when it comes to the stock market, history shows that elections don’t usually cause the big waves that some folks expect.

With the election picture getting clearer, here are five key points to keep in mind about how it might (or might not) impact the markets:

1. Election Years Usually See Market Gains: Looking back to 1950, the stock market has typically gone up in election years, with an average return of 9.1%. But remember, the stock market tends to go up over time anyway, so this isn’t too surprising.
2. Congressional Races Matter Too: This year, the fight for control of Congress is just as crucial as the presidential race. The outcomes of these races could influence what the next administration can achieve, depending on whether we end up with divided government or one party holding the reins.
3. Predicting Policy Impacts Is Tricky: Trying to guess which sectors or stocks will win or lose based on election outcomes is pretty risky. History shows there’s not much of a consistent pattern, so betting on specific policy changes can be a gamble.
4. The Market Doesn’t Play Favorites: Despite common myths, the stock market doesn’t really care which party is in power. The S&P 500 has seen gains under almost every political setup. Sometimes, a divided government, where no single party controls both the White House and Congress, has even been associated with stronger market returns.
5. Stick to Your Investment Plan: Elections can stir up a lot of emotions, but making investment decisions based on political predictions can backfire. The best approach is to focus on the long-term fundamentals, like corporate earnings and economic indicators, and stick with your investment strategy.

In short, while the 2024 election is shaping up to be a big deal politically, the impact on the stock market might not be as dramatic as some think. The key for investors is to keep an eye on the long game and not get too caught up in the election-year hype.

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.

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