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How Political Parties in Power Influence Markets

No matter whether the White House and Congress are unified or divided, the stock market tends to march higher.



When political questions are in the headlines, especially during election seasons or times of uncertainty, one may ask what impact the party in power has on the markets. But whether the White House and Congress are in sync or divided, and regardless of which party has majority control, markets tend to be resilient. History shows that the stock market (as represented by the S&P 500 Index)1 generally marches higher regardless of which party is in charge.

 

How markets react when the president and Congress represent the same political party

(D) Democrat, (R) Republican, 1937−Present

  S&P 500 Index (%)
Start End President Senate House 1 Yr 3 Yr 5 Yr 10 Yr 20 Yr
1937 1939 D - Franklin D. Roosevelt D D -34.75 -5.27 -7.47 4.37 11.12
1939 1941 D - Franklin D. Roosevelt D D -0.38 -7.37 3.71 7.18 13.38
1941 1943 D - Franklin D. Roosevelt D D -11.59 10.11 16.81 13.25 14.66
1943 1945 D - Franklin D. Roosevelt D D 25.63 26.97 14.74 16.95 15.16
1945 1947 D - Harry S. Truman D D 36.31 9.82 10.60 17.00 14.88
1949 1951 D - Harry S. Truman D D 18.60 24.58 17.74 19.94 14.86
1951 1953 D - Harry S. Truman D D 23.97 13.21 23.76 16.08 12.06
1953 1955 R - Dwight D. Eisenhower R R -0.94 25.63 13.51 13.40 11.64
1961 1963 D - John F. Kennedy D D 26.88 12.48 13.25 8.18 8.31
1963 1965 D - Lyndon B. Johnson D D 22.76 17.14 12.37 9.91 8.30
1965 1967 D - Lyndon B. Johnson D D 12.46 7.83 4.98 1.25 7.79
1967 1969 D - Lyndon B. Johnson D D 23.89 8.01 8.38 6.62 10.15
1977 1979 D - Jimmy Carter D D -7.19 5.41 8.09 13.80 14.54
1979 1981 D - Jimmy Carter D D 18.45 14.27 17.30 16.27 17.73
1993 1995 D - Bill Clinton D D 10.08 15.35 20.27 9.35 8.22
2003 2005 R - George W. Bush R R 28.68 14.39 12.83 7.10  
2005 2007 R - George W. Bush R R 4.91 8.63 0.42 7.68  
2009 2011 D - Barack Obama D D 26.46 14.12 17.94 13.12  
2017 2018 R - Donald Trump R R 21.83 15.28      
Average 12.95 12.14 11.62 11.19 12.19

Sources: Senate.gov and House.gov. Congressional sessions run two years (e.g., the House became Republican in the 2016 midterm election and served from January 2017 to January 2019).

 

Summary

  1 Yr 3 Yr 5 Yr 10 Yr 20 Yr
# Positive 14 17 17 18 15
# Negative 5 2 1 0 0
Total 19 19 18 18 15
% Positive 74% 89% 94% 100% 100%
% Negative 26% 11% 6% 0% 0%

 

How markets react when the president and Congress represent different political parties

(D) Democrat, (R) Republican, 1937−Present

  S&P 500 Index (%)
Start End President Senate House 1 Yr 3 Yr 5 Yr 10 Yr 20 Yr
1947 1949 D - Harry S. Truman R R 5.63 9.70 16.56 18.29 13.65
1955 1957 R - Dwight D. Eisenhower D D 31.41 7.70 14.90 12.79 6.86
1957 1959 R - Dwight D. Eisenhower D D -10.72 12.69 12.77 9.19 7.90
1959 1961 R - Dwight D. Eisenhower D D 11.95 12.58 9.86 10.00 6.52
1969 1971 R - Richard Nixon D D -8.40 2.82 1.99 3.16 9.52
1971 1973 R - Richard Nixon D D 14.22 5.06 3.22 8.45 11.14
1973 1975 R - Gerald Ford D D -14.67 -4.82 -0.18 6.71 11.32
1975 1977 R - Gerald Ford D D 37.14 16.37 14.74 14.75 14.56
1981 1983 R - Ronald Reagan R D -4.88 12.28 14.63 13.90 15.66
1983 1985 R - Ronald Reagan R D 22.46 19.63 16.40 16.13 12.69
1985 1987 R - Ronald Reagan R D 31.64 18.00 20.33 14.36 13.21
1987 1989 R - Ronald Reagan D D 5.18 17.32 15.35 15.28 11.80
1989 1991 R - George H.W. Bush D D 31.69 18.53 14.55 19.21 8.43
1991 1993 R - George H.W. Bush D D 30.47 15.62 16.59 17.45 9.14
1995 1997 D - Bill Clinton R R 37.58 31.15 28.56 12.07 9.85
1997 1999 D - Bill Clinton R R 33.36 27.58 10.70 8.42 7.68
1999 2001 D - Bill Clinton R R 21.04 -1.03 -0.57 -1.38 5.62
2001 2003 R - George W. Bush D R -11.89 -4.05 0.54 1.41  
2007 2009 R - George W. Bush D D 5.49 -5.63 -0.25 6.94  
2011 2013 D - Barack Obama D R 2.11 16.18 12.57    
2013 2015 D - Barack Obama D R 32.39 15.14 15.79    
2015 2017 D - Barack Obama R R 1.38 11.41 11.70    
2019 2021 R - Donald Trump R D 31.49        
Average 14.61 11.56 11.40 10.90 10.33

 

Summary

  1 Yr 3 Yr 5 Yr 10 Yr 20 Yr
# Positive 18 18 19 18 17
# Negative 5 4 3 1 0
Total 23 22 22 19 17
% Positive 78% 82% 86% 95% 100%
% Negative 22% 18% 14% 5% 0%

Data Sources: Morningstar and Hartford Funds. Data starts on January 1 of the year following each November midterm election. US equity is represented by S&P 500 Index.

Performance data quoted represents past performance and does not guarantee future results. Indices are unmanaged and not available for direct investment.

 

 

Talk to your financial professional today to make sure your portfolio is positioned correctly regardless of what happens in Washington, D.C.



1S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.

Investing involves risk, including the possible loss of principal.

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