With only five left days until Election Day, voters eager for early results should take a look at the S&P 500 index.
Though the correlation isn’t necessarily an obvious one, the performance of the S&P 500 index has an eerie way of predicting the outcome of presidential elections. And so far, it’s got an 86 percent success rate in predicting a party change in the presidential election.
According to Sam Stovall, who first noted this trend, if the S&P 500 runs a positive return between July 31 and Oct. 31 of an election year, the newly elected president will be of the same political party as the previous president. A decline in the market, on the other hand, predicts the presidency will be given to a candidate from the opposing party.
So what does this mean for the current election?
Well, considering the general decline seen in the market since August, the index indicates a clear win for Donald Trump.
While this pattern may seem like nothing more than an impressive coincidence, the S&P’s prediction has only been wrong in three elections since 1944.
Stovall theorizes that outside, geopolitical factors and third party candidates were to blame for those deviations.
The general idea is that when the economy is thriving, voters are less likely to want a dramatic shift in leadership. When voters are more fearful of the future economy, though, they’re more likely to vote for a president from the opposing party.
While some theorize that third party candidate Gary Johnson, who is currently polling at approximately 4.1 percent, could impact the results of the election causing the prediction to be proven false.
This is highly unlikely, however, considering no third party candidate has had a significant-enough impact on an election in such a way that drastically changed the outcome. In the 1968 election between Republican Richard Nixon, Democrat Hubert Humphrey and Independent George Wallace, when the S&P 500 suggested a Democrat should have won, Nixon did instead. And the five states Wallace won were traditionally Republican states, anyway, suggesting that Wallace probably had no impact on the ultimate outcome.
The 1980 election that also deviated from the S&P 500 prediction by electing Republican Ronald Reagan. Though there was an Independent candidate during that election as well — John B. Anderson — but he didn’t win any elector votes and had no impact on the end result.
In national polls, Clinton holds a less than 2-point lead over Trump, and he’s been steadily gaining back support since his ratings dipped in mid-October.