NEW YORK — Stocks mostly slipped in mixed trading Monday as the constrictor of higher interest rates tightened its coils around Wall Street.
The S&P 500 edged up by 0.34, or less than 0.1%, to 4,288.39, coming off its worst month of the year. The Dow Jones Industrial Average dropped 74.15 points, or 0.2%, to 33,433.35, and the Nasdaq composite rose 88.45, or 0.7%, to 13,307.77.
The American flag flies June 29, 2022, at the New York Stock Exchange.
Slumps for oil-and-gas stocks weighed on the market after crude prices gave back some of the sharp gains made since the summer. The majority of stocks fell alongside them, with more than three quarters of those within the S&P 500 sinking, but gains for Apple and other influential Big Tech stocks helped support indexes.
Stocks have broadly given back 40% of their strong gains for the year since the end of July. The main reason is Wall Street’s growing acceptance that high interest rates are here to stay a while as the Federal Reserve tries to knock high inflation lower. That in turn has pushed Treasury yields to their highest levels in more than a decade.
People are also reading…
The yield on the 10-year Treasury climbed again Monday, up to 4.67% from 4.58% late Friday, and is near its highest level since 2007.
High interest rates also make borrowing more expensive for all kinds of companies, which can pressure their profits. Since the Federal Reserve indicated last month it likely won’t cut rates as much in 2024 as earlier expected, the value of the U.S. dollar has also climbed against other currencies. That can mean a painful hit for S&P 500 companies, which get a big chunk of their revenue from abroad.
The overall U.S. economy has so far been holding up, defying predictions that it would have fallen into a recession by now.
Manufacturing has been one area that’s felt the sting of higher rates, and reports Monday suggested it’s still contracting, though perhaps not by as much as expected. A report from the Institute for Supply Management said U.S. manufacturing shrank in September for an 11th straight month.
More encouraging for Wall Street was that the report also indicated prices were easing in September. That could mean less pressure on inflation, which has been feeling heat recently from fast-rising oil prices.
Congress over the weekend avoided a shutdown of the federal government, which threatened to hurt the economy and disrupt the publication of economic data Wall Street finds crucial. But Capitol Hill only temporarily delayed the threat, promising another showdown. Plus, traders are well aware the stock market has held up rather well through past shutdowns.
The Strongest Post-Election Stock Markets in History
The Strongest Post-Election Stock Markets in History
Photo Credit: oneinchpunch / Shutterstock
The U.S. political landscape has become more polarized than ever before. In fact, a study of developed democracies around the world found that the political polarization trend in the U.S. is more dramatic than in any other country in the study. In the months prior to the 2020 election, the overwhelming majority of both Biden and Trump supporters responded that they would “be very concerned about the country’s direction” and believed that it would cause lasting harm to the U.S. if their opponent won. This amount of turmoil surrounding presidential elections not only influences Americans’ everyday decisions, but the volatility can be seen in the U.S. stock market as well.
Voter turnout is the highest it has been in 120 years
As recent presidential elections have become increasingly contentious, certain issues facing Americans are coming into focus. The economy has always been a hot-button issue for American voters, but recent inflation and stock market volatility have made it an increasingly important concern. This is especially true for Republicans, who consider the economy the most important issue facing our country.
The combination of increased political polarization alongside a rocky economy has likely contributed to the record levels of voter turnout observed in recent years. Since bottoming out at just under 52% in 1996, voter turnout has steadily risen to nearly 67% during the 2020 election cycle. This level of civic engagement has not been seen since 1900—a sign of heightened voter focus.
Stock gains tend to even out over time
Despite increasing polarization around elections, one political party does not appear to have a significantly greater impact on the stock market than another. In the short term, the post-election stock market appears to slightly favor Republicans, with six out of the nine since 1932 producing positive two-week returns. This may be due to the fact that Republicans tend to favor less government regulation in business, and are often perceived to prioritize business and economic interests.
Over time, however, there is not a clear difference in the stock market when one political party is elected over another. In fact, there have only been five out of the 23 election cycles since 1932 that produced negative returns in the four years after election day. And of the five elections with the largest market price increases during the four years after election day, three were Democratic presidents—Franklin D. Roosevelt in 1932 and Bill Clinton in 1992 and 1996. Republican presidents Dwight D. Eisenhower (1952) and Ronald Reagan (1984) round out the top five.
To determine the strongest post-election stock markets in history, researchers at U.S. Money Reserve ranked post-presidential election stock markets from 1896 to 2020 according to the percentage change in the Dow Jones Industrial Average® stock market index two weeks after each election. In the event of a tie, the presidential election with the larger percentage change from election day to inauguration day was ranked higher.
Here are the strongest post-election stock markets in history.
15. 1916 presidential election
- Stock market price change (2 weeks post-election): +2.7%
- Stock market price change (inauguration day): -11.4%
- Stock market price change (4 years post-election): -20.3%
- Elected president: Woodrow Wilson (Democratic)
- Runner-up: Charles Evans Hughes (Republican)
14. 1972 presidential election
- Stock market price change (2 weeks post-election): +2.9%
- Stock market price change (inauguration day): +4.2%
- Stock market price change (4 years post-election): -1.9%
- Elected president: Richard Nixon (Republican)
- Runner-up: George McGovern (Democratic)
13. 1952 presidential election
- Stock market price change (2 weeks post-election): +2.9%
- Stock market price change (inauguration day): +6.6%
- Stock market price change (4 years post-election): +83.3%
- Elected president: Dwight D. Eisenhower (Republican)
- Runner-up: Adlai Stevenson II (Democratic)
12. 2016 presidential election
- Stock market price change (2 weeks post-election): +4.2%
- Stock market price change (inauguration day): +8.6%
- Stock market price change (4 years post-election): +47.5%
- Elected president: Donald Trump (Republican)
- Runner-up: Hillary Clinton (Democratic)
11. 2004 presidential election
- Stock market price change (2 weeks post-election): +4.3%
- Stock market price change (inauguration day): +4.1%
- Stock market price change (4 years post-election): -7.3%
- Elected president: George W. Bush (Republican)
- Runner-up: John Kerry (Democratic)
10. 1936 presidential election
- Stock market price change (2 weeks post-election): +4.7%
- Stock market price change (inauguration day): +5.3%
- Stock market price change (4 years post-election): -23.5%
- Elected president: Franklin D. Roosevelt (Democratic)
- Runner-up: Alf Landon (Republican)
9. 1904 presidential election
- Stock market price change (2 weeks post-election): +5.4%
- Stock market price change (inauguration day): +14.7%
- Stock market price change (4 years post-election): +25.2%
- Elected president: Theodore Roosevelt (Republican)
- Runner-up: Alton B. Parker (Democratic)
8. 1908 presidential election
- Stock market price change (2 weeks post-election): +5.8%
- Stock market price change (inauguration day): -1.3%
- Stock market price change (4 years post-election): +8.9%
- Elected president: William Howard Taft (Republican)
- Runner-up: William Jennings Bryan (Democratic)
7. 1996 presidential election
- Stock market price change (2 weeks post-election): +5.9%
- Stock market price change (inauguration day): +13.3%
- Stock market price change (4 years post-election): +81.7%
- Elected president: Bill Clinton (Democratic)
- Runner-up: Bob Dole (Republican)
6. 1896 presidential election
- Stock market price change (2 weeks post-election): +6.5%
- Stock market price change (inauguration day): +1.0%
- Stock market price change (4 years post-election): +48.8%
- Elected president: William McKinley (Republican)
- Runner-up: William Jennings Bryan (Democratic)
4. 1924 presidential election
- Stock market price change (2 weeks post-election): +6.6%
- Stock market price change (inauguration day): +18.6%
- Stock market price change (4 years post-election): +147.9%
- Elected president: Calvin Coolidge (Republican)
- Runner-up: John W. Davis (Democratic)
3. 1928 presidential election
- Stock market price change (2 weeks post-election): +10.2%
- Stock market price change (inauguration day): +23.9%
- Stock market price change (4 years post-election): -74.9%
- Elected president: Herbert Hoover (Republican)
- Runner-up: Al Smith (Democratic)
2. 2020 presidential election
- Stock market price change (2 weeks post-election): +10.6%
- Stock market price change (inauguration day): +15.8%
- Stock market price change (4 years post-election): +29.8%
- Elected president: Joe Biden (Democratic)
- Runner-up: Donald Trump (Republican)
1. 1900 presidential election
- Stock market price change (2 weeks post-election): +13.4%
- Stock market price change (inauguration day): +11.0%
- Stock market price change (4 years post-election): +8.8%
- Elected president: William McKinley (Republican)
- Runner-up: William Jennings Bryan (Democratic)