San Diego Housing Market News and Analysis
Stock Market Rallies in Mid-Term Election Years
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Submitted by powayseller on August 12, 2006 - 12:51pm
Has anyone studied the factors in place to allow stock markets to rally, in the face of a weakening economy heading into recession? Historically, stocks rally in mid-term election years. A long rally of one year or two years. I guess this happened also in the recession years 1982 and 1990. What I don't know, after googling this for many hours, is any more about it. Very little info exist on this topic. Perhaps in 1982 and 1990, the economy was on the road of recovery OUT of a recession, not going INTO one.
There's another historical precedent: after the Fed stops raising interest rates, the stock market falls for several months.
If Roubini is right, and the Fed cuts rates at its September meeting, thus fulfilling the mid-term election year political promise, could the stock market rally for one year? In spite of weak earnings and lower GDP and rising oil prices?
Any insight is appreciated.
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