A Record-Breaking Year for US Stocks Amid Election-Year Dynamics

Aline Medeiros | June 25, 2024

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Key Takeaways:

  • The S&P 500 has hit record highs 31 times in 2024.
  • Election years generally favor stocks, especially with incumbent presidents running for re-election.
  • Analysts are revising year-end targets upwards despite potential volatility.

As we approach the midpoint of 2024, US stock markets are on an unprecedented tear, with the S&P 500 breaking records 31 times since January. This performance defies elevated interest rates, inflationary pressures, and geopolitical uncertainties, making 2024 the most robust start to an election year on record.

Election Year Trends and Market Performance

Historically, presidential election years have been favorable for stocks. The S&P 500 has averaged a 7% return in these years since 1952, according to LPL Financial. However, the returns soar to 12.2% when the incumbent president runs for re-election. This year’s performance has outstripped these averages, with the S&P 500 up 14.6% year-to-date, the best start for an election year ever recorded by Goldman Sachs.

The Stability Factor

Incumbent presidents seeking re-election typically bring a sense of stability that investors find reassuring. This year is unique because both major party candidates have previously occupied the White House. Ed Clissold, Chief US Strategist at Ned Davis Research, suggests that this dual incumbency reduces uncertainty, potentially advancing the usual year-end election relief rally.

Consistent Gains and Market Sentiment

Remarkably, the S&P 500 has not seen a 2% decline in 333 days, the longest such streak since February 2018. Scott Rubner of Goldman Sachs remains optimistic about the latter half of the year, noting that a strong first half often leads to a robust second half. Mark Hackett, Chief of Investment Research at Nationwide, concurs, emphasizing the stability and strength of the current market rally.

Broad-Based Rally

The recent market gains are not just confined to a few high-flying tech stocks like Nvidia (NVDA), which is up over 155% this year. The equal-weighted S&P 500 rose by 1.12%, and the small-cap Russell 2000 increased by 0.79% last week, demonstrating a broad-based rally.

Revised Year-End Targets

Given the sustained upward trajectory, several analysts have raised their year-end targets for the S&P 500. Scott Chronert of Citigroup now projects the index to reach 5,600 by year-end, up from his previous target of 5,100. Analysts from Goldman Sachs, Barclays, Deutsche Bank, and UBS have also adjusted their expectations upwards.

Potential Volatility Ahead

Despite the optimism, October often brings increased market volatility in election years. Thursday’s CNN debate between President Joe Biden and former President Donald Trump could generate significant headlines and market movements. Jim Reid of Deutsche Bank notes that such events could shift market sentiment rapidly.

Complacency Risk

Ed Clissold warns that prolonged optimism could lead to complacency, making the market vulnerable to negative news. He suggests that a fall pullback could coincide with earnings revisions, Federal Reserve decisions, and election uncertainties, potentially turning a minor dip into a more significant downturn.

Global Election Influences

The US is not alone in facing election-related market impacts. The UK and France also have upcoming elections, adding to global political uncertainty. In the UK, polls suggest a likely victory for the Labour Party on July 4. Meanwhile, French President Emmanuel Macron has called a snap parliamentary election, with the first round on June 30 and the second on July 7, after his party’s poor performance in European elections. Katie Nixon of Northern Trust Wealth Management anticipates that political uncertainty will cause volatility in European equity and debt markets until these elections conclude.


The US stock market’s remarkable performance in 2024 has been driven by factors unique to this election year, particularly the presence of two incumbent candidates. While the rally has been broad and robust, analysts caution against complacency as political events and economic decisions loom. Investors should remain vigilant, recognizing that while the first half of the year has been exceptionally strong, the latter half may bring increased volatility and unexpected challenges. As always, thorough analysis and strategic planning will be crucial in navigating the remaining months of this landmark election year.