Kamala Harris should be able to make it to the Oval Office in no time. At least, that’s what the stock market says. It has soared to record highs since the vice president entered the race in July, which is historically very good news for incumbent candidates.
In reality, of course, polls are showing a virtual dead heat, with the campaign entering its final stages and prediction markets suggesting recent momentum for Donald Trump. As the graph below shows, Harris’ defeat marks only the third time since World War II that a candidate representing the fortunes of an incumbent party has no correlation with stock market performance. It will be. The outliers are Dwight Eisenhower’s victory in 1956 and Hubert Humphrey’s and Jimmy Carter’s defeats in 1968 and 1980, respectively.
Analysis by Sam Stovall, chief investment strategist at CFRA Research. The S&P 500 is up nearly 5% since Harris began her campaign, but she sees potential similarities between this campaign and the 1968 and 1980 elections. are. This election is the only time an incumbent party candidate did not win the White House despite a similar market surge.
Like Humphrey, who lost to Richard Nixon in 1968, Harris replaced an unpopular incumbent president on the Democratic ticket. Humphrey won the nomination after Lyndon B. Johnson decided not to run for re-election amid growing anger over the Vietnam War. Harris replaced Joe Biden after concerns about his age were exacerbated by the poor quality of the Biden debate in June.
“In 1968 we had an unpopular war in Vietnam, and in 2024 we have an unpopular war here on inflation and immigration,” Stovall said.
Both elections featured noisy third-party candidates. But Robert F. Kennedy Jr., whose father was assassinated while campaigning for the Democratic nomination in 1968, will have less influence on next week’s results than George Wallace did more than 40 years ago. (Five southern states won by the racist former Democratic governor of Alabama).
Finally, Stovall noted that in both 1968 and 2024, markets received a boost when the Federal Reserve decided to cut interest rates. But seemingly favorable economic conditions did not bring Mr. Humphrey to the White House.
“Maybe it’s the same with Harris,” Stovall said.
President Joe Biden’s administration hailed the Fed’s September rate cut as a sign of a victory against inflation, but voters remain angry about high prices, and Donald Trump is understandably trying to shift the situation onto Harris. . During Biden’s term, inflation rose to its highest level since President Jimmy Carter lost to Ronald Reagan in 1980.
The Iran hostage crisis also jeopardized Carter’s re-election, but third-party candidates did not help him either. After losing the Republican nomination to Reagan, John B. Anderson ran as an independent, attracting votes from disaffected liberals and college students.
It is unclear whether Ms. Harris will be successful in increasing voter turnout among young people. disapproval Regarding the Biden administration’s support for Israel. Geopolitics also became a big issue when Eisenhower defeated Adlai Stevenson for the second time in 1956. This is the only election since 1944 in which a sitting president weathered a market downturn before Election Day.
The former five-star general’s immense popularity may seem quite odd in today’s heightened polarization. Still, Stovall said, Egypt’s seizure of the Suez Canal and the resulting crisis underscored the importance of Eisenhower’s foreign policy credentials. Meanwhile, in 2024, both candidates argue that they are the best choice to deal with conflicts in Ukraine and the Middle East.
top concern But the economy remains important among voters. Harris will hope that the stock market’s typical election trends hold as she heads to the polls.
