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Arguably the largest event for the S&P 500 last year was the US presidential election, held in early November. We’re now over three months past that date, with Donald Trump implementing early policy actions. Investors have already experienced high volatility in the market during this period, with tariff talk and other actions in focus. Yet if someone had invested £10k the day before the election, here’s how things would be looking now.
Details of the performance
On the day before the election, the S&P 500 was trading at 5,712 points. It’s now at 6,129 points. This marks a 7.3% increase over the three-and-a-half-month period in question. So the £10,000 would currently be worth £10,730.
Clearly, the initial takeaway is that stocks have taken the election results well. Some people might think that a 7.3% return isn’t exactly outstanding. Yet it’s important to note that this is the profit after only a few months. Using some nifty maths, the annualised performance would be 27.45%, if the stock market kept rising at the same pace as it has done since the election. Of course, there’s no guarantee of this, but it helps to put in perspective the size of the move we’ve seen since November.
It might interest investors to know that over the same time period, the FTSE 100 is up by 7.12%. Part of this can be explained by the general positive sentiment felt by stock investors around the world. Yet it also goes to show that the performance of the S&P 500 isn’t significantly better than index performances from other countries.
Election winners
Within the index, there have been some clear early-stage winners from the election. For example, Tesla (NASDAQ:TSLA). If an investor had bought the US stock the day before the election, they would be up a whopping 45.8%. Over a broader one-year time period, the stock is up 82%.
Part of the jump can be explained due to the close ties that Elon Musk has forged with President Trump. Some feel that the affiliation could ultimately be beneficial for Tesla as a company, with Trump maybe offering preferential terms or trade agreements for the electric vehicle (EV) maker.
The business has performed well over this period. Since the election, there has been more news around robotaxi approvals, with Musk committing to releasing a prototype of the Optimus humanoid robot this year.
One concern is that higher competition in the EV space could cause the traditional source of revenue to fall. In fact, 2024 saw the firm post the first annual decline in EV sales in more than a decade.
I think the stock is worth considering for investors. I’ve held it for a while already and won’t be selling any time soon as I feel the rally could continue for some time. If anything, I’d look to buy more if the stock did see a dip.
The bottom line
The S&P 500 has done well in the months that have followed the November election. Given the outperformance of select election winners, I feel investors can look to active stock picking to try and beat the index this year.
