Trends have shown that the United States stock market is capable of making near-accurate predictions about the Presidential elections—and recent data from Wall Street indicates a considerable probability of Democratic Presidential nominee Kamala Harris taking the White House.
Knewz.com has learned that Wall Street’s prediction came at a time when the national polls have been steadily placing Harris at a two-point advantage over former President Donald Trump.
The data behind the prediction is the Dow Jones Industrial Average’s year-to-date return, which is often considered a marker for investor sentiment as well as the economic health of the nation.
A strong year-to-date return ahead of the elections can indicate investor confidence and economic stability in the country.
As a result, voters are often inclined to keep the incumbent party in power in a bid to maintain said stability and seldom cry for a change in national leadership.
It has been reported that the Dow Jones Industrial Average’s year-to-date return in October 2024, the month before the elections, has signaled a significant chance of the Democratic Party retaining the White House.
According to a recent analysis, “Dow Jones Industrial Average’s strong year-to-date return translates to a 72% probability that the Democratic candidate, Vice President Kamala Harris, will win the presidential election in November.”
It is worth noting that a 72% probability of Harris’s triumph is a more generous prediction than the ones by national polls—which have placed Harris at a 2.1-point lead with 49.3% votes.
It has been pointed out that the predictions based on Wall Street’s performance from a couple of months ago pointed toward a 64% probability of Harris winning the 2024 elections, a probability that has seen a sharp hike of 18% since.
“The increases in probabilities since then are due to the stock market’s strength; there’s a statistically significant correlation between the Dow’s election-year performance and the incumbent political party’s chances of retaining the White House,” it has been reported by Market Watch, a Dow Jones company.
The outlet further claimed that “electronic futures markets are a relatively recent phenomenon, making it difficult for their track records to be statistically significant.”
“But this is not the case with the Dow, since we have data for more than 30 presidential elections dating back to the late 1800s. I calculate that the correlation between the Dow’s year-to-date return through mid-October and the incumbent party’s chances of winning are significant at a 97% confidence level,” finance analyst Mark Hulbert wrote on Market Watch.
Hulbert further explained, “The theoretical basis for believing the stock market is a good political predictor is that it is a sensitive leading indicator of the economy’s future performance. People tend to vote their pocketbooks.”
“The bottom line: The Dow’s indication of who will win the presidency deserves to be taken seriously,” he added.
On the other hand, predictions have shown a gradually declining faith in a Republican White House win this year, especially since the September 10 Presidential debate.
It was reported at the time that, following the ABC News debate between Trump and Harris – during which Harris emerged “victorious,” per popular belief – presidential betting trends showed a sharp decline in the support for the former President and a proportionate hike in the support for VP Harris.
While the gap between the two presidential candidates in the national polls remains quite narrow, it has widened significantly since the Vice President threw her hat in the ring for the presidential race.
However, it is worth noting that according to the latest polls published on Project 538, the two candidates are almost tied in the swing states of Wisconsin, Pennsylvania, Michigan, and Nevada.
In Wisconsin, Trump is commanding a 0.1-point lead over Harris with 47.8% votes, whereas in Pennsylvania, the numbers are exactly reversed.
