Election may boost stocks
If history holds true this election year the market will
rise by November
From Contributing Editor William S. Rukeyser
July 18, 1996: 3:37 p.m. ET
Fed proceeding
cautiously - July 2,
1996
Russian investment
rides on election - July
3, 1996
Election '96
Smith Barney Wall
Street Watch
New York (CNNfn) -- If history holds, get ready to pop the
champagne and let go of the balloons because the stock market is
bound to go up by November.
"If you go back and look at this century -- I guess there have
been twenty-three presidential elections -- in the six months leading
into those elections, there's never been a bad stock market," said
John Manley, an equity strategist with Smith Barney.
Manley analyzed the Standard & Poor's composite index from
May to November of every presidential year since 1904. The
average gain was twice that of a typical half-year in the stock
market.
Even in 1920 and 1948, the only two pre-election periods in
which the S&P did not rise, the dips were small.
After the recent tumult, the stock market will have to get busy if
it wants to avoid becoming the exception of the century. At
mid-week the S&P 500 was down more than three percent since the
beginning of May.
Like many analysts, Manley blames the decline mainly on
concern about corporate earnings. But he thinks the trend of interest
rates will guide the market from now until November, and he
doubts the Federal Reserve will push rates up.
Manley expects the Dow Industrials to climb about five percent
by Election Day.
"If I had to pick a number, I'd say probably around 5600," said
Manley, referring to where he sees the Dow in November.
"I think it's going to be a decent market. And I think it's also
going to be a tougher market to make money in than it's been in the
last year-and-a-half. But it's not bad, and it's still worth sticking
around for," Manley said.
Beyond election time all bets are off. Another market historian,
Yale Hirsch, has established that big bear markets also follow a
pattern.
They usually start in the year after a presidential election. |
