Market Performance, Volatility, and Volumes around US Presidential Elections

Key Takeaways

As we head into the 2024 U.S. presidential election, we thought it would be interesting to analyze equity market performance (index price), volatility (VIX), and volumes (ADV) around U.S. Presidential elections back to 1992. When we sat down to write this note, the premise was that the immediate window around U.S. Presidential elections represents a time of uncertainty. As such, it was expected that volatility should tick up into election day and then settle after. The opposite effect was expected for market performance, as people pull back immediately ahead of election day and then markets recover after.

Life is never that simple – we did not see a consistent pattern across election periods for all metrics analyzed. For market performance and volumes, the results were mixed: 50%/50% overall upward/downward trend. Volatility established a consistent pattern, a downward path: 87.5%/12.5% overall downward/upward trend.

This is because in real life, ceteris paribus (all other things being equal) does not apply. In other words, it is hard to separate out all of the factors in play around elections, including: the economy; geopolitical tensions or wars; and financial market conditions.

As we head into November, the economy remains strong. Financial conditions are solid. Geopolitical concerns remain heightened. Looking to markets, volumes are flat overall for the year, while markets have continued an upward slope. Volatility is elevated, yet at a manageable level.

Author

Katie Kolchin, CFA
Director of Research

Related Resources

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