Which, according to history, the stock market typically does after the US election

Stocks typically rise after a presidential election – but history shows that investors must first be prepared for short-term fluctuations.

Since 1980, the three major presidential election year benchmarks have averaged gains between Election Day and the end of the year, according to CNBC data. However, investors should not expect the market to jump straight back after the polls close.

In fact, all three indices posted average declines in the session and week following these voting days. As data from CNBC shows, stocks have tended to recoup most or all of these losses within a month.

This means that investors should not expect an immediate increase on Wednesday or in the following days.

This is especially true given the possibility that the presidential race, which is neck-and-neck, may not be contested until Wednesday morning. America may also have to wait for tight congressional races to finally decide which party has control of each house.

“The election is now in focus and will be the next catalyst for financial markets,” said Amy Ho, executive director of strategic research at JPMorgan. “We caution that uncertainty about the outcome may remain as the timeline for certifying election results could take days for the presidential election and weeks for the House of Representatives elections.”

This election comes amid a strong year for stocks that has catapulted the overall market to all-time highs. With a gain of about 20%, 2024 had the best first 10 months of a presidential election year since 1936, according to Bespoke Investment Group.