The stock market's behavior on election day seems to follow a familiar pattern. As voters in Ohio, Kentucky, Virginia, and Mississippi participated in local races and weighed in on contentious issues like abortion rights, the S&P 500 saw a 0.4% increase during morning trading on Tuesday.

Historically, this is right in line with expectations. For the past nine years, the Dow Jones Industrial Average has closed higher on election day, while the S&P 500 has closed higher three consecutive times.

Data from Dow Jones Market shows that from 1970 to 2022, the S&P 500 typically moved an average of 0.32% on election days, which usually fall in the first week of November. Interestingly, the index experienced upward movement 60% of the time.

While a 0.32% average may not appear significant, it is essential to note that the S&P 500's average daily change for all trading days between 1970 and 2022 was only 0.03%. This means that stocks are roughly 10 times more volatile on election days compared to non-election days.

However, much of this volatility can be attributed to specific years marked by extraordinary market swings. These swings are usually tied to economic conditions rather than the act of voting itself.

For instance, on November 4, 2008, the S&P 500 experienced a considerable jump of 4%—its highest swing on an election day since the 1970s. Nevertheless, this movement was relatively ordinary given the economic and market crisis that year. In the last three months of 2008, the index saw 17 days with gains exceeding 2% and 22 days with losses surpassing 2%.

The most tumultuous election day for stocks occurred in 1987 when the index tumbled by 1.9%. This decline unfolded just two weeks after a dramatic downturn that many considered the first contemporary global financial crisis. During this period, stocks plummeted by nearly 30% from October 13 to Black Monday on October 19.

It took until early December for the market to hit rock bottom as investors grappled with concerns about globalization, the U.S. trade deficit, and the weakness of the dollar.

Despite these historical fluctuations, normalcy is generally seen as favorable for stocks on election day.

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