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For investors, cutting through the noise will be particularly challenging. The important question is, with many Canadians having significant exposure to U.S. assets in their portfolios, what will the outcome mean for their investments?

Financial markets are prone to respond to daily developments – both the good and the bad. This volatility is normal, and reacting emotionally is never a good investment strategy. No matter the results at the polls on election day, sticking to your long-term goals will still be your key to success.

To help keep things in perspective, let’s review how stock markets have reacted to past U.S. elections.

What history tells us

While past performance doesn’t guarantee future results, you may be surprised to find out that previous elections haven’t led directly to sustained financial market turbulence. Of the 24 presidential elections since 1928, Democrat and Republican victories were split at 13 and 11, respectively. Following each of those elections, the S&P 500 rose, regardless of who landed in the White House. This statistic is significant because, as a stock index that tracks the performance of 500 of the market’s largest publicly traded companies, the S&P 500 is often used as an indicator of the overall economy’s direction.


S&P 500 Average Cumulative Returns

(following presidential elections)

This graph shows a black line, red line and blue line that chart the s and p five hundred’s average
cumulative return in the months following presidential elections. The black line charts the results following all elections. The blue line charts the results following Democratic victories. The red line charts the results following Republican victories.
The three lines gradually rise as they move along the x axis.
The x axis marks from left to right the time periods following an election: one month, three months, six months, one year, three years and four years. The y axis shows the average cumulative return going from negative ten percent at the bottom to eighty percent at the top.
The blue Democrat line rises above the others starting just below one percent at the one month mark and rising to just below seventy percent at the four year mark.
The black line is in the middle starting just below zero at the one month mark and rising just above forty percent at the four year mark.
The red line rises more gradually than the others starting below zero at the one month mark and rising to above twenty percent at the four year mark.

Source: Bloomberg. Based on the last 24 presidential elections beginning in 1928. Data starts from the beginning of March (Presidential terms began in March prior to 1933).


The presidential race certainly receives the most attention, but control of Congress – which will be decided on November 5 as well – can also influence how markets respond to the election outcome.

Again, the S&P 500 has historically averaged positive returns under nearly every partisan combination between the White House and Congress, as the following chart indicates. Results even indicate that a divided government can lead to better market performance. In these situations, the need for the two parties to compromise tends to produce tamer policy outcomes with more predictable results for investors. In general, markets don’t respond well to the uncertainty that comes with unchecked partisan policy making.


S&P 500 Average Annual Return

(1933-2024, excluding 2001-2002)

This bar chart shows the S and P five hundred’s average annual return from nineteen thirty three to two thousand and twenty four under various partisan combinations in the White House and Congress.
The x axis marks the different partisan combinations from left to right.
The y axis marks the return starting from negative five percent at the bottom to twenty percent at the top.
The Democratic President and Democratic Congress bar rises to 9.22%
The Democratic President and Republican Congress bar rises to 8.79%
The Democratic President and Split Congress bar rises to 17.78%
The Republican President and Republican Congress bar rises to 10.78%
The Republican President and Democratic Congress bar drops to negative 1.81%
The Republican President and Split Congress bar rises to 16.37%

Source: Bloomberg as of August 30, 2024. 2001-2002 data excluded due to the balance of power in Congress shifting within the time frame.


Key take-aways

Given the passion of U.S. voters, and the uncertainty around how and when any disputed results would be resolved, you can almost certainly expect some market volatility around November 5. At times like these, it’s important to remember:

  • Volatility is a normal part of investing. Markets will react to political uncertainty, elections and policy changes. Keeping your emotions in check – and staying focused on a plan that’s geared toward your goals and risk tolerance – can be essential to your long-term investing success.
  • Media and news reports can be informative, but they shouldn’t be a driving force in your decision-making. Market performance always needs to be put into perspective, with your goals at the centre. Speaking with a financial representative can add far greater value than reacting to headlines.
  • Professionally managed investments offer comfort and value. Rest assured that the investment fund managers we partner with have been through market uncertainty. They understand the market, are equipped with sound strategies, and take an approach that’s designed to outlast market volatility.

Here are 5 strategies for getting through market volatility.

Check out our Market View page for investment basics and weekly updates on market performance.

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