Understanding the impact of US presidential elections on financial markets can be complicated. However, U.S. Bank has potentially found a way to determine which election outcomes are most favorable (and least favorable) for financial markets.

Recently, U.S. Bank shared an article, featuring research conducted by its strategists. This research analyzed election results and market data dating back to 1948, including overall market returns and S&P 500 returns on a three-month average.

The study compared stock market returns with six potential election scenarios, including Democrat control of both the White House and Congress, Republican control of both, and various combinations of party control.

The analysis revealed that the best election results for financial markets involved two specific scenarios. These included Democratic control of the White House along with Republican control of Congress or split party control of the Senate and House.

On the other hand, the worst election outcome for financial markets was evident when Republicans controlled the White House and Democrats held full control of Congress. This scenario resulted in lower returns compared to one-party wins or a divided government.

The article emphasized that macroeconomic factors, such as economic growth, inflation rates, and corporate earnings, also played a significant role in market performance. Ultimately, the research highlighted the importance of considering these economic indicators rather than solely focusing on election outcomes when making investment decisions.

The upcoming 2024 US presidential election, which could potentially feature a Biden-Trump rematch, is closely watched by investors. Despite the attention surrounding the election, the findings suggest that other economic factors should remain central in guiding investment strategies.