US Elections: Stock Market Sheds Big Hint on Whether Donald Trump or Joe Biden Will Win

With one day to go before the US presidential election, a shift in the stock market has given a key indication of who is going to win.

The S&P 500 indicator has fallen 0.04% in the period between July 31 and October 31.

The result means that the market is predicting that Democratic candidate Joe Biden will win the election, beating current US President Donald Trump on Tuesday (Wednesday NZT), according to CFRA Research’s Presidential Predictor.

The stock market has a reliable track record of predicting whether an incumbent is likely to be voted.

Since World War II, there is an 88 percent chance that the president of the United States will be removed when the S&P has fallen in the three months leading up to the presidential election, according to CNN.

By contrast, when the S&P 500 sees a rise over the same period, the president has been re-elected 82 percent of the time.

Previously, the stock market had favored Trump to win the election, but on Friday the S&P 500 fell 1.2 percent. The slide sent stocks down negative percentage points and, according to the analysis, gives Biden a very slim margin.

“This year, the Predictor closed slightly in the red during this three-month period, which implies, but does not guarantee, that Biden will emerge victorious,” Sam Stoval, CFRA chief investment strategist, told CNN.

The S&P 500 is a stock index that measures the performance of the shares of the 500 large US companies that are publicly traded.

The prediction coincides with other Wall Street forecasts, including an analysis by Goldman Sachs that predicted a “blue wave” of support for the Democrats, giving the party control over the House of Representatives and the Senate.

“Such a blue wave would probably push us to improve our forecasts,” Jan Hatzius, chief economist at Goldman Sachs, wrote last month. He said Democratic control of the House and Senate would release stimulus funds that could be positive for the market.

JPMorgan strategists wrote in July this year that they believed a Biden win could be neutral to positive for markets.

“The consensus view is that a Democratic victory in November will be negative for stocks. However, we view this result as neutral or slightly positive,” said Dubravko Lakos-Bujas, who led the team’s investigation.