Standard & Poor’s arrived at this conclusion after estimating the market composite S&P 500 will end this year at 1085, a 25% improvement from 2002’s close and the first gain in the past three years. Better still, S&P forecasts the good times will continue to roll into the fourth year of the Bush administration, closing 2004 at 1190, an additional 11% total return gain.
Looking at the Presidential winning streak trend since 1928, S&P found the market has been up 17 times on the third year of a presidential term and been down only twice – 1931 and 1939. The average capital change was 14.31%.
Additionally, as S&P is prognosticating for 2004, fourth years of presidential terms have also been good to the S&P 500, which finished up in 15 of 18 periods – down only in 1932, 1940 and 2000. The average capital change was a more modest 7.31%.
“This historical perspective would have trend followers conclude that the S&P 500 will end positive both this year and in 2004, a view supported by the improving markets and economy,” said Howard Silverblatt, equity market analyst, Standard & Poor’s. “The average returns during the second two years of the presidential cycle by far outpace that of the first two years typically. This is due, in part, to market uncertainty in the wake of implementation of new policies early in the presidential cycle.”