The stock market may have no loyalty to either Republicans or Democrats, performing mostly the same no matter which party is in the White House, but the Dow is tanking the day after President Barack Obama was re-elected. However, the poor performance has more to do with timing than Obama.
The stock market may have no loyalty to either Republicans or Democrats, performing mostly the same no matter which party is in the White House, but the Dow is tanking the day after President Barack Obama was re-elected.
By 1 p.m. on Wednesday the Dow was down 290 points (-2.19%), the Nasdaq off 73 points (2.43%) and the S&P 500 was reporting losses of 30 points (-2.17%).
However, the stock market’s poor performance has nothing to do with the election, according to experts. More than anything, Wednesday’s losses are about timing.
The biggest contributor to the market’s meltdown was Europe. Just hours after Obama gave his victory speech in Chicago, Ill., the president of the European Central Bank, Mario Draghi, made some comments that spooked investors.
According to Draghi, recent data out of Germany suggested that the country was facing an economic slowdown. The data was more worrisome than economists had been forecasting, according to Business Insider.
In fact, just before Draghi made his gloomy comments, the markets had been rallying after Obama’s re-election and were positive in the early hours of the morning.
Chart from BusinessInsider.com.
However, Europe isn’t the only thing working against Obama in his first day after re-election. According to Bespoke Investment Group, the day after the presidential election is historically a bad one for the markets.
For the seven Election Days since 1984, the stock market has been down for five out of the seven. The only positive days were in 1996 after Bill Clinton was re-elected and in 2004 after George W. Bush was re-elected.
Copyright Bepoke Investment Group
However, despite the fact that Obama has faced two tough market days following his elections, the president “has enjoyed one of the better overall stock market runs since his inauguration,” according to Bespoke.
The two days following Obama’s elections are in the top five for worst performance after a presidential election. According to Bespoke, the other three days were in 1932 when Franklin D. Roosevelt won, in 1948 when Harry Truman won and in 1940, again when FDR won.
The numbers look bad for Democrats, but research into the market’s performance under presidents has shown that it doesn’t do any better under Republicans, although that is the general perception.