How the presidential election affects the stock market

LEXINGTON, Ky. (WTVQ) — The election results are dragging on and the stock market is up and down, raising concerns about investments.

Is it anything to worry about? We found out it’s surprisingly not.

But one thing the stock market hates is uncertainty.

“Anything that is uncertain leaves us with lower stock market prices,” says UK Professor of Economics, Chris Bollinger. “People pull back, they sell off.”

Most people agree 2020 has had its share of uncertainty so why should the presidential election be any different? But as the country gets closer to knowing a winner, the stock market already likes what it is seeing.

“The presidential election is important and having an outcome there is important but the market also likes to know what’s happening with the Senate and the House,” says Adarsh Mashru, financial research analyst for Dupree Financial Group in Lexington.

It’s likely the Senate will stay controlled by the GOP and the House democrats – something Bollinger says the market likes.

“The current split we have in a lot of ways is the safe bet because it’s really hard to have big, sweeping reform when the Senate is controlled by one party and the House is controlled by another,” says Bollinger.

And he says that won’t change with whoever is president so the market is safe from those changes.

Going into a presidential election, research analyst Mashru says we typically see the stock market decline a bit and as results come in it goes up.

He says that’s true of this election too, and right now it’s close to an all time high.

“Tthe stock market and the economy tend to have a life of their own and often we try to relate it to events whether it be politics or anything else going on,” says Mashru.

He says it’s best to just have a plan, know your risk, and try not to guess what the market will do.

Bollinger says civic unrest and a CVODI surge could have more of an impact but even then, the market has overcome both. He says we’ve found ways to adapt which has been huge.

“That’s gonna lead to a continued recovery and that’s gonna be good for the stock market,” says Bollinger.