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Was The 'Black Monday' A Bad Sign For Kamala Harris?

AInvestTuesday, Aug 6, 2024 6:47 am ET
2min read

At the beginning of August, global stock markets encountered a Black Monday, which not only caused heavy losses for investors but could also affect the results of the U.S. presidential election in November. Analysts believe this is bad news for Harris.

According to the analysis of Adam Turnquist, Chief Technical Analyst at LPL Financial: The performance of the U.S. stock market in the three months before Election Day can predict the outcome of the presidential election.

In a recent report to clients, he wrote, While polls, betting odds, and forecasts can provide valuable insights into potential election outcomes, the data can be noisy. To avoid some of that noise and potential biases, keep an eye on how the market performs during the three-month period before Election Day - a period that officially starts on Monday, August 5.

Turnquist pointed out that since 1928, whenever the S&P 500 SPX was positive during the three months leading up to an election, the incumbent party remained in control of the White House 80% of the time.

He further explained that historically, the U.S. stock market has performed well in the months leading up to the presidential election, perhaps because politicians do everything they can to keep investors in a positive mood. The Dow Jones data supports this point; in the 32 presidential election years since the index was established, it has risen 23 times between June and October, accounting for 72%.

This Monday, the Dow Jones and S&P 500 fell by 2.60% and 3.00% respectively, setting the largest single-day drop since September 2022. The Nasdaq also fell by 3.43%, closing at 16,200.08 points as expected.

Although Black Monday has little to do with Harris, Trump did not miss this once-in-a-lifetime opportunity to mock Harris. He even chanted slogans like TRUMP CASH and KAMALA CRASH, calling on voters to choose between the two. Previously, Harris had caught up in various polls and was neck and neck with her rival.

According to multiple media reports, on August 5th local time, Harris officially received the nomination for the U.S. Democratic presidential candidate.

Starting on August 1st, about 4,700 Democratic delegates participated in a five-day online voting process. About a day and a half later, Harris had already secured enough delegate votes to lock in the nomination. The voting ended on the evening of the 5th, and Harris's nomination officially took effect.

However, as Turnquist said, there are still three months to go, so there is no need to worry too much now. He pointed out that the recent surge in the fear index (VIX) may not be a cause for concern for investors.

August and September...are historically down months. Investors should also keep an eye on how stocks perform from now to Election Day, as performance during this three-month period has an impressive track record of predicting election outcomes, he wrote.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.