The Election Outcome Investors Dread May Be the Best for Stocks

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With elections looming, investors are bracing for the worst. Surprisingly, however, a unified government—an outcome most investors dread—has historically been great for the stock market. Evercore strategists crunched the numbers, showing that when one party controls the presidency, Senate, and House, stock returns tend to outperform. A Republican or Democratic clean sweep has historically delivered over 9% annualized returns since 1928, beating divided government by a full 2 percentage points.
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Despite Wall Street’s reflexive anxiety over single-party dominance, the underlying data suggests investors may be overlooking a key point: political unity often aligns with strong market returns. According to Evercore, markets don’t crumble due to election results but rather from recession indicators, none of which are flashing red at the moment. Jobless claims, credit spreads, and economic surveys all point to stability, with valuations high but not in bubble territory.

​And the cherry on top? A swift, uncontested election could push the S&P 500 to 6,500. However, if the election descends into chaos or disputes, a sell-off could spike volatility with the VIX climbing to 38. In short, the only thing Wall Street has to fear might be the fear of a contested election itself.