Stock market reactions to Donald Trump-involved U.S. presidential elections: Evidence from the S&P 500 in 2016, 2020, and 2024

This study assesses the impact of U.S. presidential elections on stock market behaviour, focusing on the 2016, 2020, and 2024 elections, in which Donald Trump was a candidate. Using an event-study framework, we analyse changes in S&P 500 volatility and returns by comparing a 10-day election event period with a preceding 10-day control period. We assume that mean volatility and returns differ significantly between these periods. To verify the robustness of the results, we conduct a comparative analysis using the results from earlier U.S. presidential elections in 2004, 2008, and 2012. Furthermore, the implementation of a placebo test for structurally analogous non-election periods strengthens the credibility of the findings. The results reveal a significant increase in the volatility of S&P 500 returns during all three Trump-involved election periods. However, they do not confirm statistically significant differences in mean rates of return between event and control periods. For both the 2004, 2008, and 2012 election periods and the placebo periods, volatility changes are not statistically significant, supporting the robustness of the findings. Our results confirm increased market uncertainty during the U.S. presidential election periods involving Donald Trump as a candidate.