In the run-up to the U.S. Presidential election, the stock market's performance could serve as a reliable predictor of the election results, as per the chief technical strategist at LPL.
What Happened: Adam Turnquist, LPL's chief technical strategist, stated that the S&P 500 has an 83% success rate in forecasting the victorious political party in the Presidential elections since 1928, Business Insider reported on Thursday.
Turnquist emphasized the stock market's performance in the three months preceding the election as the key predictor.
"Since 1928, whenever the S&P 500 was positive during the three months leading up to an election, the incumbent party remained in control of the White House 80% of the time," he explained.
For example, a 24.8% fall in the S&P 500 in the three months before the 2008 election indicated the Democrats' victory, led by President Barack Obama, ending the Republican's eight-year control of the White House. Likewise, a 2.3% decline in the S&P 500 before the 2016 election signaled President Donald Trump's win, ending the Democrats' eight-year rule.
Why It Matters: The stock market predictor, though not perfect, is noteworthy. The S&P 500 is currently down about 0.5% since the three-month window opened on Monday, hinting at the Republicans as the likely winners in November. However, with 88 days left before the election, the market's performance and its influence on the election result are still uncertain. Earlier this year, Trump credited his lead in the polls for the market's success but later blamed Vice President Kamala Harris for its crash.
The upcoming presidential debate on Sep. 10 between Trump and Harris could further influence the market and, potentially, the election outcome.
The SPDR S&P 500 ETF Trust (NYSE:SPY) that tracks the S&P 500 was trading 0.34% lower at $528.85 during Friday's pre-market while Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) was down 0.48% and was trading at $445.93 at the same time, according to Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari