Ready for a lame duck session? Here’s how the S&P 500 performed immediately after the US presidential election

The race between Vice President Kamala Harris and former President Donald Trump is over. No matter who wins, a bad session will follow. The lame duck session occurs immediately after the election until the winning candidate is sworn in. This concerns Congress and the President, and it could be an interesting time. After so much anticipation, there are only a few months left as Washington enters a transition period. However, Congress can still meet and the outgoing incumbent can sign laws and issue executive orders. Let’s see how the broader market benchmark S&P 500 Index the index showed results immediately after the US presidential elections.

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You might think that after the elections the politicians relaxed. However, during this period of failure, great things happened. In 1992, after his defeat by Bill Clinton, former President George H. W. Bush pardoned six Iran-Contra plotters, all of whom were indicted or convicted. Former President Barack Obama got several bills through Congress during his lame duck period in 2016-2017, including the Cures Act. Trump had 13 judicial nominations to various courts confirmed by the U.S. Senate before he left office in 2021.

To see how S&P 500 Index I looked at the index’s performance from the day after a new president was elected to the day he was sworn in several months later, starting in 2000. Here are the specific dates for each bad period:

November 8, 2000 – January. 20, 2001

November 3, 2004 – January. 20, 2005

November 5, 2008 – January. 20, 2009

November 7, 2012 – January. 21, 2013

November 9, 2016 – January. 20, 2017

November 4, 2020 – January. 20, 2021

As you can see, the lame duck presidency is usually 2.5 months, give or take. Here’s how the S&P 500 performed in each of these periods:

The results are contradictory. The average return during presidential failures is only 1%. Big moves happened in 2008-2009 after Obama became president and after President Joe Biden won the last election. Obama took office during the Great Recession, and investors appeared wary of what a Democratic administration would mean for the economy and stock market after eight years under former Republican President George W. Bush.

Stocks have performed well since Biden’s election. The stock market has already performed well amid the pandemic. Many believed Biden would introduce more stimulus that would encourage more stock buying and additional measures to help end the pandemic and reopen the economy.

What to expect after the elections

The past is certainly not a prediction of future results. In this case, past data shows that anything can happen to the stock market during a presidential downturn. What’s happening may have more to do with what’s going on in the world than the next president. Make no mistake, next president and Congress will influence new policies and regulations and perhaps even influence the trajectory of inflation and therefore interest rates.

But if you’re a long-term investor, there’s no need to buy or sell shares unless you think future policies or legislation from a new president will dramatically change your investment views. Be prepared for potential instability and understand that the changing political landscape may be a contributing factor.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has disclosure policy.