American markets appear to be breaking their nine-day slide on the day before Election Day. Based on historical data and the fact that S&P 500 is up 1.5% since the market opened this morning — likely on the news the FBI's latest look into Hillary Clinton's e-mails has ended — investors are seeing some solid gains today.
Since Oct. 25, the S&P 500 has been on a downward spiral, claiming the most consecutive negative days the index has had in 35 years. While the loss was modest — it fell by about 3% over the nine days — the drop has naturally made jittery investors even more nervous about what might happen around Election Day. It doesn't help that the NASDAQ was also down nine days in a row, while the Dow Jones Industrial Average had a week of straight losses.
While markets may be reacting positively to the latest political news — equities have tended to rise when Clinton has had an edge and fall when she doesn't — even if nothing new happened, equities likely still would have climbed, at least according to a decade of past performance.
According to the Stock Trader's Almanac website, both the Dow Jones Industrial Average and the S&P 500 have climbed the day before an election 81.3% of the time since 1952, rising by 0.4% and 0.3%, respectively. Markets have also climbed 56.3% of the time on Election Day itself, with the DJIA rising, on average, by 0.24% and the S&P 500 by 0.22%.
Why the gain? Because people generally feel good about doing their civic duty, the experts say.
It's similar to how markets react around Christmas, they add, when people feel good about themselves. Also coming into play is that on both the day before and the day of the election, investors are more preoccupied with voting than buying and selling stocks.
