no matter how tuesday<u+2019>s<u+00a0>election shakes out, the markets aren<u+2019>t likely to sit still. stocks have a history of sharp moves in the trading day following presidential elections. should that pattern continue, investors might be better off ignoring them. initial reactions often have been misleading. in 1932, when franklin d. roosevelt was first elected, the dow jones industrial average dropped 4.5% the following day. yet the market roared higher in the year that followed. similarly, the dow fell 3.8% after harry truman <u+2019>s surprise victory over republican thomas dewey in 1948. the market finished up that year. more recently, president barack obama <u+2019>s two victories in 2008 and 2012 sparked drops of 5.3% and 2.4%, respectively. yet mr. obama has presided over one of the best bull markets in history. the market clearly is nervous over whether the next occupant of 1600 pennsylvania avenue will be hillary clinton or donald trump. the s&p 500 through<u+00a0>friday<u+00a0>logged its longest stretch of declines in 36 years . the change in election odds over the past several days suggests that the prospect of a trump victory worries markets more than the prospect of mrs. clinton, the status-quo candidate, prevailing. but, in the latter case, investors might soon turn their attention to higher interest rates coming as soon as next month, which could once again roil markets. stocks have rallied following elections, too. in 2004, george w. bush <u+2019>s re-election prompted a 1% rally, but the market did poorly during that term. conversely, bill clinton <u+2019>s re-election in 1996 prompted the dow to jump 1.6% and the tech-fueled bull market continued until the last several months of that term. the major indexes are still clinging to slim year-to-date gains.<u+00a0>since 1950, the s&p 500 has averaged a 2.5% rise in the final two months of election years and has been higher three-fourths of the time, according to ryan detrick at lpl financial. the wild card, though, is this being the eighth year a president has been in office. they are notoriously weak for stocks. the financial crisis in 2008 is the most recent and stark example. as brexit taught investors<u+2014>stocks slid 5.3%<u+00a0>in two days<u+00a0>but recovered within two weeks<u+2014> the first reaction isn<u+2019>t necessarily the right reaction . corrections & amplifications: the dow jones industrial average fell 4.5% the trading day after franklin d. roosevelt was elected in 1932. a photo caption on an earlier version of this article incorrectly stated it fell 4.5% the day he was elected. (nov. 8, 2016) write to steven russolillo at steven.russolillo@wsj.com
stocks and the election: the first reaction isn<u+2019>t always the right reaction  - wsj
steven russolillo