With Election Day finally here, markets are bracing for potential volatility. History shows that the stock market can react unpredictably to election outcomes, especially when the results are unclear or contested. In past elections, sudden policy shifts, political uncertainty, or contentious outcomes caused heightened volatility—making it essential to prepare your portfolio now to weather whatever the day brings.has averaged a 7% gain during US presidential election years since 1952.
With the rush of voters to the polls today, there are already warnings that several key states may not report results for several days. As Yahoo News reported: This reflects both disappointment when expected outcomes don’t materialize and uncertainty about the policy direction under a new administration. However, markets typically recover by December, with the S&P 500 posting gains in about 61% of election years. However, these gains are often muted compared to non-election years, with average year-end increases below 1%
Furthermore, the options skew on Treasury futures is exceptionally lopsided, while, as shown above, traders are incredibly long equities. If Tuesday's election outcome is disputed or delayed, Treasury bonds could rise as investors retreat from equities.yields dropped steadily throughout the contested election period, reflecting growing demand for safe assets.