Why do elections affect the market?
The market is very sensitive to uncertainty, and elections bring a lot of uncertainties. Investors cannot predict which policies the winning candidate will prioritize, how these policies will affect various industries, and the future direction of the economy. This uncertainty can lead to market volatility, especially in the months leading up to election day.
Historically, the U.S. stock market tends to be more volatile in election years, but that does not mean the market always declines. In fact, data shows that the market generally performs well in election years, especially after the results are clear. However, industries such as healthcare, energy, and technology may experience greater volatility depending on the policies proposed by the candidates.