Is Joe Biden or Donald Trump? US stock market expert forecasts unexpected outcome of presidential poll based on movement of indices

Who will win the US election that is set for November 5, 2024? Given the intense rivalry between Joe Biden and Donald Trump, the stock market has historically shown itself to be a trustworthy predictor.

President Joe Biden’s odds of winning re-election vary widely, ranging from less than 38% to as high as 76%, according to recent surveys of well-known prediction markets.

Trump has a 45% chance of winning the poll, compared to Biden’s 44% chance, according to an Economist survey.

The poll prediction’s methodology

In order to obtain understanding of substitute indicators, Mark Hulbert carried out a study that included a range of financial, sentiment, and economic metrics. The real GDP, the Conference Board’s consumer confidence index, the University of Michigan’s consumer sentiment survey, and the U.S. stock market were all included in this analysis, with an emphasis on how each had changed year over year before Election Day.

The stock market was the only one of these indicators to show a statistically significant correlation with the likelihood of victory of the incumbent party at the 95% confidence level.

Analysis results indicate that Joe Biden will win.

His research demonstrates a strong correlation between the stock market’s year-to-date performance and the likelihood that the current party will win the presidency. He demonstrates how this correlation is supported by historical data going back to the Dow Jones Industrial Average’s founding in 1896.

President Biden’s odds of winning reelection are 58.8% based on this historical correlation and the Dow’s current year-to-date price-only gain of 5.6%. If there are any more gains or losses in the stock market before Election Day, these odds will change appropriately.

Hulbert contends that it’s difficult to make the case that electronic prediction markets have better track records than the stock market, even in the absence of their ambiguity. It is more difficult to identify statistically significant patterns with small sample sizes. As an illustration, the Iowa Electronic Markets (IEM), one of the earliest prediction tools, has only been used in nine presidential elections since its founding in 1988.

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