Kamala Harris should have a cakewalk to the Oval Office. At least, that’s what the stock market says. It’s surged to record highs since the vice president entered the race in July, which has historically been very good news for incumbent candidates.
In reality, of course, polls show a virtual dead heat, with prediction markets signaling recent momentum for Donald Trump as the race enters its final days. As the chart below shows, a Harris loss would be just the third time since World War II that a candidate representing the fortunes of an incumbent party hasn’t been correlated to the performance of the stock market. The outliers are Dwight Eisenhower’s victory in 1956, and the respective losses of Hubert Humphrey and Jimmy Carter in 1968 and 1980:
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Sam Stovall, chief investment strategist at CFRA Research, is responsible for the analysis. While the S&P 500 has gained nearly 5% since Harris launched her campaign, he sees potential parallels between this race and the elections of 1968 and 1980 — the only occasions incumbent party candidates failed to win the White House despite a similar market surge.
Like Humphrey, who lost to Richard Nixon in 1968, Harris also replaced an unpopular sitting president on the Democratic ticket. Humphrey won the nomination after Lyndon B. Johnson decided not to run for reelection amid growing anger over the Vietnam War. Harris replaced Joe Biden after the latter’s poor debate in June exacerbated concerns about his age.
“You had an unpopular war in Vietnam in ’68,” Stovall said, “and an unpopular war against inflation and immigration here in 2024.”
Both races also featured a noisy third-party candidate. However, Robert F. Kennedy Jr., whose father was assassinated campaigning for the Democratic nomination in ’68, will likely impact next week’s result less than George Wallace did more than four decades ago (The former Democratic governor of Alabama, a segregationist, won five states in the South).
Finally, in both 1968 and 2024, the market received a boost when the Federal Reserve decided to cut interest rates, Stovall noted. Seemingly kinder economic conditions, however, didn’t end up carrying Humphrey to the White House.
“Maybe that could be the same case with Harris,” Stovall said.
Joe Biden’s administration hailed the Fed’s September cut as a sign of victory against inflation, but voters are still upset about high prices—leading Donald Trump, unsurprisingly, to try and pin the situation on Harris. During Biden’s term, inflation surged to its highest levels since President Jimmy Carter lost to Ronald Reagan in 1980.
While the Iran hostage crisis also doomed Carter’s reelection bid, a third-party candidate didn’t help him either. John B. Anderson ran as an independent after losing the Republican nomination to Reagan, attracting votes from disaffected liberals and college students.
It’s unclear whether Harris will succeed in driving turnout among young voters, many of whom disapprove of the Biden’s administration’s support for Israel. Geopolitics also loomed large in 1956, when Eisenhower defeated Adlai Stevenson for a second time. It’s the only election since 1944 in which an incumbent president has weathered a market downturn before election day.
The former five-star general’s immense popularity may seem exceptionally quaint amid today’s heightened polarization. Still, Stovall noted, Egypt’s seizure of the Suez Canal and the resulting crisis underlined the importance of Eisenhower’s foreign policy credentials. In 2024, meanwhile, both candidates have claimed to be the best choice to handle conflict in Ukraine and the Middle East.
The top concern among voters, however, remains the economy. As they head to the ballot box, Harris will hope the stock market’s typical electoral trend holds.
This story was originally featured on Fortune.com