Will The Stock Market Impact The Election?

The stock market hasn’t done very well at all, and is down roughly 5% from it’s highs just in the last month with another day in the red shaping up for today (the S&P is trading around 1400, having fallen from roughly 1470 earlier this month).

I think another 4-5% before the election could be devastating to President Obama, and given how quickly we’ve shed the amount we have, a drop of that amount (or close to it) could definitely happen, especially with the way that the market has been trending down.  It only takes a few tenths of a percentage points a day to add up to a pretty big drop.

Such a large drop would be roughly a double digit drop and would signify a pretty big warning sign about the economy.  Since the stock market is forward looking (meaning the movement is largely centered upon what investors believe is going to happen down the line), this would be a very bad sign.

Plus, people don’t like to lose money and if they’ve just witnessed 10% of their 401(k) and investment savings go down the drain, this could make people pretty cranky.  Generally, when people are cranky and go out to vote, they tend to take out some of their crankiness on the incumbents.

I’ll be curious to see what the stock market does between now and the election.  So far it hasn’t shown any encouraging signs, and if the bears continue to chip away, I believe it could have an impact on the election.  If the president has any aces up his sleeve regarding the economy, he would be wise to play them.

What are your thoughts?  Could a bad October translate to a bad November day at the polls for the president?

10 thoughts on “Will The Stock Market Impact The Election?”

  1. I doubt anything he could do at this point would have affect on the economy…besides keeping Bernanke away from the public…seems like every time time he speaks the market drops.

  2. Investors may not only be reacting to earnings reports, but also anticipating the effect of the ‘fiscal cliff’. I wrote about it over at Live and my Finances. Historically, the market goes up in Presidential election years, but then down after the election – or so I understand.

    • True, I think there are a lot of factors at play with the fiscal cliff being one. Europe is another big one.

  3. I don’t think the market will have much of an effect over this last few weeks. I think what the market has done over the past year will be much more of an influence on voters than an isolated 2 weeks. Not sure if theres another jobs/housing report due out before the election, but good/bad news there could have an effect too.

  4. I am not sure that the market in October will have that much of an impact. Many people have already decided who they will vote for. Those who are undecided or independent voters likely won’t simply look to the market to make that decision.

    • True, and the last couple of days have been nice. The meida keeps talking about how things are tight but I think they’re just trying to give themselves something to do and keep people tuned in.

  5. According to me, there is not any direct relation between Stock Market and election. Each voter already has been taken decision on the basis of several prospect and now stock market impact will not affect it. Stock market impact is a small thing and only affect to investor. Even I don’t think that investors take decision on the basis of it only, because there are huge list of issue to think about.

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