Entering 2024, the US presidential election has become one of the focuses of attention in overseas markets. The Bank of America said that as the current US presidential term enters its fourth year, this is a critical year for the stock market.

The US presidential election is held every four years, and the 60th US presidential election in 2024 will be held on November 5, 2024. The elected President and Vice President will take office on January 20, 2025.

According to data dating back to 1928, the fourth year of the presidential term was one of the strongest years for the stock market. The median value and average return of the S&P 500 index reached 10.7% and 7.5% respectively, second only to the third year of the presidential term.

The China Merchants Securities Research Report also shows that since the 80s, the performance of US stocks has been extremely regular in the political cycle.

Specifically, US stocks are bound to fall in the first two years of every president's first term (unless US stocks have fallen short before Obama took office), US stocks occasionally fell in the last two years of his second term (if re-elected), and there were no negative returns in the middle years.

Combining the US political cycle to influence the economic cycle, election results influence private investment, and almost every administration has a New Deal dividend at the beginning of its term. The rise in US stocks in 2024 is likely. If the Federal Reserve cuts interest rates beyond expectations in 2024, US stocks may also perform even stronger before the general election.

Furthermore, it is worth noting that the Bank of America pointed out that although historically, the stock market brought stable returns in the fourth year of the presidential term, with a probability of increase of 75%, such gains are quite unstable, and are not expected to occur until the second half of this year.

Bank of America technology strategist Stephen Suttmeier said in the latest report that the average monthly return of the S&P 500 index in the fourth year of the presidential cycle showed mediocre performance in January-May, rebounded in the summer of June-August, fell before the September-October election, and rebounded after the November-December election.

Furthermore, in fact, the US stock market has always been regarded as one of the important indicators for predicting election results.

According to the data, if the S&P 500 index rises from August to October of the general election year, the current president will be re-elected; if it closes down, the competitor will enter the White House.

Sam Stovostovo, chief investment strategist at the US Financial Research and Analysis Center (CFRA), added that the accuracy rate of this forecast indicator is as high as 90%, and the same is true in 2020.

Cow friends,

Are you optimistic about the performance of US stocks in the election year?

Welcome to leave your wonderful comments in the comments area~

Editor/Somer