If historical trends are any indicator, a unique stock market gauge suggests Vice President Kamala Harris may defeat former President Donald Trump in the 2024 presidential race. This predictive pattern, developed by Sam Stovall, chief investment strategist at CFRA Research in Allentown, Pennsylvania, hinges on the market’s performance from late July to Halloween.
How the Predictor Works
Since 1944, the incumbent party has retained control of the White House in all but two elections when the U.S. stock market posted gains in the period from July 31 to October 31. According to Stovall, voters often give the incumbent party the benefit of the doubt when the market is doing well.
In the most recent example, the S&P 500 rose 3.3% during this three-month stretch in 2024. In comparison, the market fell 0.04% during the same period in 2020, a year when then-President Donald Trump lost to President Joe Biden.
Historical Reliability
Stovall’s model has shown consistent predictive success, with the party in power retaining the presidency when the market advanced during the defined period. Conversely, when the S&P 500 fell during this time frame, the incumbent party has lost 89% of the time, failing only in 1956 when President Dwight Eisenhower won re-election despite a 7.7% drop in the S&P 500.
“It makes sense if the market goes up most of the time and the incumbent gets re-elected most of the time,” Stovall told CBS MoneyWatch. This overlap is seen as a reflection of voter confidence in the current administration during times of positive economic sentiment.
Statistical Significance and Skepticism
Despite its intrigue, Stovall admits the model’s limitations, acknowledging that basing predictions on just 21 elections since World War II may not pass rigorous statistical scrutiny. “Is this really statistically significant? I think the answer is no, but it makes for interesting copy,” he said. Stovall pointed out that while data can be used to tell many stories, he still stands by his predictor due to its historical consistency.
Stovall’s Confidence in the Prediction
“I believe we will see a Harris victory ultimately, because I’m a very big believer in history and rules-based investing,” Stovall shared with CBS News, emphasizing his adherence to historical patterns and data-driven strategies.
With the election outcome yet to be determined, this stock market pattern will be one to watch, providing both political observers and market analysts with an additional layer of insight as Election Day results unfold.
