Despite Uncertainty, Markets See Election Week Rally

Despite a presidential election shrouded in uncertainty, stock markets rallied through large parts of last week, resulting in the best election week in decades. The S&P 500 closed the week up 7.3 percent on Friday, capping its best week since April, while the Nasdaq and Dow Jones saw similar gains.

As the following chart shows, the S&P 500 gain marks the index’s best election week performance since 1932, when Franklin D. Roosevelt beat Herbert Hoover. Considering that investors typically loathe uncertainty, last week’s market reaction does come as a bit of a surprise. When the presidential race last hung in the balance for as long as it did this year, when George W. Bush ended up defeating Al Gore in 2000, the S&P 500 dropped 4.3 percent during election week.