Which party is better for the U.S. stock market? The answer to this question may surprise some people. Studies consistently show that the stock market actually performs better under Democratic presidencies than Republican.
I know what you’re thinking. Conventional wisdom says that Republican presidents are preferred by big money donors on Wall Street. But evidence consistently suggests otherwise and investment professionals in the business of making money should re-think this view. According to a recent analysis by Ned Davis Research, the Dow Jones Industrial Average (DJIA) returned 7.2% during Democratic administrations compared to just 3.6% under Republican presidents. In fact, several other studies have also reached this conclusion. For example, a 2003 study by two finance professors at UCLA titled “The Presidential Puzzle: Political Cycles and the Stock Market” also found that the the stock market performs better and tends to be less volatile when Democrats are in power (1896 through 2001).
These results partially explain why Wall Street firms have increased their political giving to the DNC in recent years and both Obama and Clinton have strong ties to the financial community.
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