As highlighted in a previous report in our election series, stock market movement in the three months before Election Day often predicts the outcome of a presidential election.
Historically, when the S&P 500 Index had a gain from July 31 through October 31, the incumbent, or his political party, retained the White House in all but one year. Whenever the S&P 500 declined in price during these three months, the incumbent or his party's candidate lost the election. The only exception occurred in 1956 when President Dwight D. Eisenhower won re-election despite the S&P 500 falling 7.71% during this three-month period.
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