Democrats or Republicans - What’s Best for the Market?

CFRA Research did a study from 1944 to now that tracked the S&P 500 returns under Democratic and Republican leadership scenarios. They looked at periods when all of government was unified, Congress was unified, and Congress was split. The results were enlightening. 

We had a unified government in 30 of the last 76 years. A unified government is when the President, House and Senate are all the same party. The average annual return was 10.6%. Twenty-two of the 30 years were dominated by Democrats and 8 by Republicans. The average annual return under a unified Democratic government was 9.8%. Under a unified Republican government, the average annual return was 12.9%.

We had a unified Congress in 32 of the last 76 years. This scenario tracked years where there was a Democratic President and a Republican Congress and vice versa. The average annual return was 7.4%. Twenty-two years were led by a Democratic Congress and 10 by Republicans. The average annual return under a Democratic Congress was 4.9% and the average annual return under a Republican Congress was 13%.

We had a split Congress in 14 of the last 76 years. The average annual return was 8.6%. Four years were led by a Democratic President. The average annual return was 13.6%. With a Republican President, (as of June 30, 2020) the average annual return was 5.2%.