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  • Writer's pictureRyan Lipton

Rising Covid cases, stock market drop does not bode well for Trump's reelection chances

The S&P 500, an index of the 500 largest American companies, has correctly predicted 20 out of the last 23 presidential elections since 1928, according to Bloomberg.

When the stock market rises in the last three months before the election, the incumbent party has won 86 percent of the time. As of Wednesday, the S&P 500 dipped below the 3,294 points it sat at on August 3 (three months before election day) falling to 3,271 points on Wednesday.

The horizontal line on the graph below represents the S&P 500's price on August 3. As you can see, the S&P 500 dipped below the line on Wednesday.

The stock market has fallen nearly 7.5 percent from the October 12 peak to this past Wednesday.

The recent market sell off has come at "the worst time for the president" since "Covid cases are rising and there's no vaccine," said Christopher Grisanti, chief equity strategist at MAI Capital Management via Bloomberg.

A big component to Trump's reelection campaign has been that the stock market has boomed under his presidency. However, the stock market is currently treading in murky waters and does not represent the overall economy, but rather the richest of the United States economy.

It is difficult to imagine a meaningful rise in the stock market from now until the election as coronavirus cases rise around the world and the prospects of stimulus coming from Washington look to be completely dead. There is also a looming risk over a contested election, so it is not likely people will be chomping at the bit to put money back in the market over the coming weeks.

Even when many pollsters around the country got the 2016 presidential election wrong, the S&P 500 predicted the Trump victory.

"Amid all the polls showing Democrat Hillary Clinton’s dominant lead over Trump, the S&P 500 fell for nine straight days before the election week, cementing the gauge’s decline below the level three months before voting day," said Bloomberg's Lu Wang and Claire Ballentine. "In the end, Trump won."

The S&P 500 has dropped in eight of the last 13 days.

While trying to predict what the stock market will do in the short term usually ends in folly, the current trend over the past few weeks does not bode well for Donald Trump's reelection chances.


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About Ryan Lipton:

Ryan is a student at the University of North Carolina at Chapel Hill majoring in Business Journalism. He has written in the past for SB Nation's Silver and Black Pride, USA Today Sports Media Group, North Carolina Business News Wire, the Daily Tar Heel, and has worked with Ice Cube's BIG3 basketball league.

For more of Ryan Lipton's articles click here.

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