Will a stock market boom propel Kamala Harris to the White House?

In fact, of course, the polls show it's a virtual dead heat, and the prediction markets are signaling that Donald Trump is gaining momentum recently as the race enters its final days. As the chart below shows, a Harris loss would be only the third time since World War II that a candidate representing the fortunes of an incumbent party was unrelated to the performance of the stock market. The outliers are Dwight Eisenhower's victory in 1956 and the respective defeats of Hubert Humphrey and Jimmy Carter in 1968 and 1980:

Responsible for the analysis is Sam Stovall, chief investment strategist at CFRA Research. While the S&P 500 has gained nearly 5% since Harris campaigned, he sees possible parallels between this race and the 1968 and 1980 elections – the only occasions in which incumbent party candidates failed to win the White House despite a similar market rally to win.

Like Humphrey, who lost to Richard Nixon in 1968, Harris replaced an unpopular incumbent president on the Democratic ticket. Humphrey won the nomination after Lyndon B. Johnson decided not to run for re-election amid growing anger over the Vietnam War. Harris replaced Joe Biden after his poor debate in June heightened concerns about his age.

“You had an unpopular war in Vietnam in 1968,” Stovall said, “and an unpopular war on inflation and immigration here in 2024.”

There was also a vocal third-party candidate in both races. However, Robert F. Kennedy Jr., whose father was assassinated while campaigning for the Democratic nomination in 1968, is likely to have less impact on the outcome next week than George Wallace did more than four decades ago (the former Democratic governor of Alabama, a supporter of the segregation, won). five states in the south).

Finally, the market received a boost in both 1968 and 2024 when the Federal Reserve decided to cut interest rates, Stovall noted. However, the seemingly more favorable economic conditions did not result in Humphrey moving into the White House.

“Maybe that could be the case with Harris,” Stovall said.

Joe Biden's administration hailed the Fed's rate cut in September as a sign of victory against inflation, but voters are still angry about high prices – which, unsurprisingly, led Donald Trump to blame the situation on Harris. During Biden's term, inflation rose to its highest level since President Jimmy Carter's defeat by Ronald Reagan in 1980.

While the Iran hostage crisis also doomed Carter's re-election, a third-party candidate didn't help him either. John B. Anderson ran as an independent after losing the Republican nomination to Reagan, receiving votes from disaffected liberals and students.

It is unclear whether Harris will succeed in increasing turnout among young voters, many of whom disapprove of the Biden administration's support for Israel. Geopolitics also played a big role in 1956, when Eisenhower defeated Adlai Stevenson for the second time. It is the only election since 1944 in which a sitting president has weathered a market downturn before Election Day.

The former five-star general's immense popularity may seem exceptionally strange given today's increasing polarization. However, Stovall noted that Egypt's occupation of the Suez Canal and the resulting crisis underscored the importance of Eisenhower's foreign policy credentials. In 2024, both candidates now claim they are the best choice to handle the conflict in Ukraine and the Middle East.

However, voters' biggest concern remains the economy. As they head to the polls, Harris hopes the stock market's typical voting trend continues.