It’s Wall Street’s favorite year of the presidential cycle

Feb 1, 2023, 3:10 PM | Updated: Feb 2, 2023, 6:15 am
Traders work on the floor at the New York Stock Exchange in New York, Wednesday, Feb. 1, 2023. You ...

Traders work on the floor at the New York Stock Exchange in New York, Wednesday, Feb. 1, 2023. You may be sick of politics, but Wall Street is just getting to its favorite part of the presidential calendar. The third year of the presidential cycle has historically been the best for the stock market. (AP Photo/Seth Wenig

NEW YORK (AP) — You may be sick of politics, but Wall Street is just getting to its favorite part of the presidential calendar.

The third year of the presidential cycle has historically been the best for the stock market. Going back to the start of 1945, the S&P 500 has risen an average of 15.9% during the last full year before an election, compared with an overall average of 9.2% for every year.

Most of that better-than-usual performance is packed into the first half of Year 3, according to data from CFRA Research. In the first three months of Year 3, for example, the S&P 500 has historically climbed an average of 6.9%, which is more than triple the 2.1% average for every first quarter over that span.

One line of thinking says Wall Street rises in anticipation of the White House passing economically popular measures in hopes of staying in office. The difference could also just be statistical luck. But it’s happened enough that professional investors pay at least some attention to it, even if not all the candidates running in 2024 are known yet.

The last time a president was in Year 3, in 2019 under Donald Trump, the S&P 500 soared nearly 29%.

This year, there may be less appetite for big government programs that could stimulate the economy, because they could also potentially ignite inflationary pressures.

Averages also only tell part of the story. Across 23 completed four-year terms since 1925, the S&P 500 gain in Year 3 was the best seven times according to Doug Ramsey, chief investment officer at Leuthold Group — better than random, but not by much.

The last time a first-term Democratic president was in Year 3, as Joe Biden is now, was in 2011 under Barack Obama. That time, the S&P 500 ended the year virtually flat. Much of that was because of a steep tumble in the summer, triggered by worries about the European debt crisis and the downgrade of the U.S. debt rating by Standard & Poor’s.

“That was one of the few times where we really had nothing,” said Sam Stovall, chief investment strategist at CFRA Research. “Investors usually expect the president to try to ensure that he gets reelected by stimulating the economy.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Evelyn Knapp, a supporter of former President Donald, waves to passersby outside of Trump's Mar-a-L...
Associated Press

Trump legal woes force another moment of choosing for GOP

From the moment he rode down the Trump Tower escalator to announce his first presidential campaign, a searing question has hung over the Republican Party: Is this the moment to break from Donald Trump?
1 day ago
FILE - The Silicon Valley Bank logo is seen at an open branch in Pasadena, Calif., on March 13, 202...
Associated Press

Army of lobbyists helped water down banking regulations

It seemed like a good idea at the time: Red-state Democrats facing grim reelection prospects would join forces with Republicans to slash bank regulations — demonstrating a willingness to work with President Donald Trump while bucking many in their party.
1 day ago
FILE - This Sept. 2015, photo provided by NOAA Fisheries shows an aerial view of adult female South...
Associated Press

Researchers: Inbreeding a big problem for endangered orcas

People have taken many steps in recent decades to help the Pacific Northwest's endangered killer whales, which have long suffered from starvation, pollution and the legacy of having many of their number captured for display in marine parks.
2 days ago
FILE - Hiring signs are displayed at a grocery store in Arlington Heights, Ill., Jan. 13, 2023. Emp...
Associated Press

Pay transparency is spreading. Here’s what you need to know

U.S. employers are increasingly posting salary ranges for job openings, even in states where it’s not required by law, according to analysts with several major job search websites.
2 days ago
Meadowdale High School 9th grade students Juanangel Avila, right, and Legacy Marshall, left, work t...
David Klepper and Manuel Valdes, Associated Press

Seattle high school teacher advocates for better digital literacy in schools

Shawn Lee, a high school social studies teacher in Seattle, wants to see lessons on internet akin to a kind of 21st century driver's education, an essential for modern life.
2 days ago
South Carolina Senators hear from the parents of people who died from fentanyl overdose on Jan. 19,...
Associated Press

With overdoses up, states look at harsher fentanyl penalties

State lawmakers nationwide are responding to the deadliest overdose crisis in U.S. history by pushing harsher penalties for possessing fentanyl and other powerful lab-made opioids that are connected to about 70,000 deaths a year.
2 days ago

Sponsored Articles

SHIBA volunteer...

Volunteer to help people understand their Medicare options!

If you’re retired or getting ready to retire and looking for new ways to stay active, becoming a SHIBA volunteer could be for you!
safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
It’s Wall Street’s favorite year of the presidential cycle