Time-Honored Market Election Signal on Verge of Turning on Trump

It’s a fool’s errand trying to find an election signal in a stock market roiled by a global pandemic, but investors will take any edge they can get. One such indicator is flashing a warning for Donald Trump’s chances on Nov. 3.

The sharp equities selloff over the past few days doesn’t bode well for the incumbent party, if history is any guide. Since 1928, the S&P 500’s performance in the three months leading up to the presidential election has correctly signaled who will win 20 out of 23 times, according to data compiled by Strategas Research Partners LLC. When stocks gain during that span, the sitting party has won 86% of the time.

The benchmark stock gauge is now below the level where it was Aug. 3 and has declined in eight of the past 12 sessions, capped by the 3.5% rout Wednesday that was the worst single-day drawdown since June.

“One of Trump’s favorite reasons for re-electing him is the market,” said Christopher Grisanti, chief equity strategist at MAI Capital Management. The selloff has come at “the worst time for the president. Covid cases are rising and there’s no vaccine.”