Investors worried about how Tuesday night's presidential debate between President Donald Trump and former Vice President Joe Biden will affect the stock market can rest easy.
If history is any guide, the market won't care what happens either way.
Presidential Debates Leave Few Bread Crumbs to Follow
As LPL Financial – registered investment advisor and broker-dealer – notes, the data from past debates going as far back as 1960 don't offer a clue as to how stocks react to the first debate, to say nothing of indicating which party might win.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Could stocks give a clue who will win the election based on how they do after the debate?" writes LPL Financial Chief Market Strategist Ryan Detrick. "Unfortunately, it doesn't appear to give any hints, as returns and winners are all over the place.
"Still, 2020 is unlike any year we've ever seen before, so we could be one Howard Dean gaffe or Ronald Reagan zinger away from a major sway in this election."
To get a sense of how pointless it is to look to the presidential debate for trading insights, check out LPL's "Chart of the Day" and consider just a few of the numbers:
- The odds of the market rising or falling in the session ahead are aren't far off from 50-50.
- There have been 12 first presidential debates since 1960. On average, the S&P 500 retreats 0.3% the next day. The median performance, however, is a gain of 0.4% for the broad market index. Neither of those outcomes are material.
- The days and weeks after the debate don't tell us anything useful either. Five days out, the market is higher 50% of the time. As for a month after the debate, again, stocks are positive 50% of the time.
- On average, stocks lose 0.9%, 1.8% and 2% in the five days, 10 days and one month following the debate, respectively. However, the median return is positive for all of these time frames, albeit at only fractions of a percent. Again, these returns are essentially immaterial.
- The data are skewed by the 2008 market meltdown.
The bottom line: Don't bother buying or selling stocks based on anything that happens in tonight's debate.
No, it's not a sucker's bet, but it is indeed a nothing bet.
-
Dow Jones Adds 463 Points as Rate-Cut Odds Rise: Stock Market TodaySome futures traders are now pricing in the possibility of a jumbo rate cut in September, which lifted stocks today.
-
Bullish IPO: Should You Buy BLSH Stock?Wall Street is buzzing about the Bullish IPO. The Peter Thiel-backed crypto company went public on August 13, and BLSH stock nearly doubled in its market debut.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
How to Invest for a Fall Interest Rate Cut by the FedA lot can happen between now and then, but the probability the Fed cuts interest rates in September is back above 80%.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
-
The 24 Cheapest Places To Retire in the USWhen you're trying to balance a fixed income with an enjoyable retirement, cost of living is a crucial factor to consider.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are Saying
Federal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
-
Fed Cuts Rates Again: What the Experts Are Saying
Federal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
