Remember that iconic headline that appeared in the Chicago Tribune prematurely calling the election of 1948: “Dewey Defeats Truman.” It was not exactly a Nate Silver moment. (See page 44 for more on Nate.) Interesting fact to know and tell: With the exception of Truman’s re-election, when the S&P 500 fell 11.7 percent in November of that year, markets typically get a bump in the months following an incumbent’s re-election. But so far, Obama’s re-election is looking a lot like Truman’s; in the two weeks following his re-election on Nov. 6, the S&P was down 2 percent.
Sam Stovall, chief equity strategist for S&P Capital IQ, says the S&P has traditionally advanced 1.2 percent in the November following an incumbent’s re-election, 2.7 percent in December and 3.7 percent in the November through December period.
“Should the market experience a 1948-style response to this year’s election outcome, the S&P 500 could fall to 1261, or only four points above where it started the year,” Stovall says. “In that case, let’s just hope the historical comparison plays out, as the S&P 500 advanced 3.1 percent in December 1948 and 10.3 percent for all of 1949.”