Market drop could give Trump a shot against Clinton

Published Wed, Apr 20 20162:37 PM EDT

Donald Trump is going to need more than just votes from the people on Wall Street. The biollionaire businessman may need them to sell stocks this fall. The S & P 500's performance in the three months leading up to Election Day correctly forecast 19 of the past 22 presidential elections, according to Strategas Research Partners. A rising market almost always preceded a win by the incumbent party and vice versa. "The stock market is a reflection of where the economy is headed. If economic growth does not pick up, this will likely be reflected in stocks, and hurts the Democrats, all else being equal," Daniel Clifton, head of policy research at Strategas Research Partners, wrote in an email. The Democrats have the momentum right now. After a tumultuous start to 2016, the S & P 500 is up 15 percent from a closing low in early February. The U.S. equity benchmark now trades within 2 percent of a record price reached last May. Should stocks rise to a new high, the Democratic presidential candidate, which right now looks like it's going to be Hillary Clinton, could reap the rewards as voters may not want to meddle with the status quo. But it all comes down to just the three months before the election, Clifton's research suggests. The S & P 500's move after the national conventions at the end of July through Election Day in early November correctly predicted the party to win the election 86 percent of the time going back to 1928. Its track record has gotten even better recently with the last eight election winners correctly forecast by the movement in the benchmark. Read More Dow, other key stocks form bullish 'golden cross' As of April 15, the odds of Trump winning the general election was 13 percent, according to betting markets cited by Strategas. That compares with 68 percent for Clinton. Clinton may have the betting markets on her side but the stock market may not be later this year. A CNBC survey of 15 Wall Street firms shows strategists have an average year-end target price of 2,147 on the S & P 500, representing a gain of just 2.2 percent from Tuesday's close. That wouldn't be much of a lift to sweep Clinton into office. Plus any drop in the market before the election could play into the hands of Trump, whose central message is that the U.S. economy is much weaker than it appears.

Republican candidate Donald Trump and Democratic candidate Hillary Clinton.

Scott Audette (L), Javier Galeano (R) | Reuters

Donald Trump is going to need more than just votes from the people on Wall Street. The biollionaire businessman may need them to sell stocks this fall.

The S&P 500's performance in the three months leading up to Election Day correctly forecast 19 of the past 22 presidential elections, according to Strategas Research Partners. A rising market almost always preceded a win by the incumbent party and vice versa.