The US Stock Market is heading into its most volatile month during an election year.
US stock market, According to CFRA Research, since 1992, nine of the S&P 500's 11 sectors have seen growth in the fourth quarter of an election year.
While Wall Street is preparing for the most anticipated month of the year with the presidential elections, investors are questioning whether the big boom expected from the third quarter will be there in the market. The market has grown at a record pace. According to the Chief Investment Officer of CFRA Research, historically speaking, since 1945, the share market has shown a strong performance during the election years in September. The result of this increase was almost 80% in the next October, as against the general trend of only 61% in all the years.
Additionally, according to Stovall, the benchmark index has risen in the fourth quarter 80% of the time, while the S&P 500 has risen in the third quarter less than 60% of the time since 1945.
“Factors that may continue to propel this market (in the fourth quarter) include China’s recent stimulus program, the ongoing easing in U.S. inflation readings as the personal consumption expenditures (index) for August recorded another downtick in growth, and the likelihood of two more Federal Reserve interest rate cuts totaling 50 to 75 basis points,” Stovall wrote.
Election-Year Stock Market Performance Patterns in the Fourth Quarter
Investors concerned about the performance of the stock market in the last quarter of 2024 have also received a positive signal from the broadening rally in U.S. stocks, according to Stovall.
Since the S&P 500's gain in the third quarter has been "accompanied by gains in stocks of all sizes, styles, and 10 of 11 sectors," Stovall wrote, "participation remains favourable."
FactSet data indicates that out of the 11 sectors in the large-cap benchmark index, the S&P 500's utilities, real estate, and industrials sectors performed the best this quarter, with the energy sector being the only one to see quarterly losses.
