With Barack Obama winning the presidential election, Democrats are set to control the White House, Senate and House at the same time.

Share story

With Barack Obama winning the presidential election, Democrats are set to control the White House, Senate and House at the same time.

Historically, one-party control has correlated with higher returns for the S&P 500 than gridlock, according to S&P strategist Sam Stovall, who looked back to World War II.

Some strategists, though, suggest looking to fundamentals to divine where the stock market’s heading, rather than political correlations. “In general, the party in power does not dictate the direction of the stock market, with fundamental factors, such as growth and inflation, having much more significance,” says Citi Investment Research strategist Edward Kerschner.

Bailing on Obama?

The New York Stock Exchange has been open during a U.S. presidential election only seven times in its history, and such days have traditionally been uneventful.

It first opened in 1984, when Ronald Reagan faced off against Walter Mondale. The exchange said then that it was staying open to reflect the international nature of the stock market. On that day, the S&P 500 rose 1.09 percent.

Every Election Day since has featured a smaller one-day swing, with 2000 and 2004 showing barely any change. But on Tuesday, the S&P 500 jumped 4.1 percent, its best Election Day result ever. In the next two days, though, the S&P 500 plunged 10 percent.

October surprise

October may have been the toughest month for stocks since the 1987 crash, but the number of U.S. corporate credit defaults actually declined during the month, according to Standard & Poor’s. The credit-rating agency recorded four defaults during October. That’s down from seven the previous month, which included the demise of Lehman Brothers and Washington Mutual.

The Associated Press