How Stocks Perform After Major Protests

Election Day is a key date to watch in the next six months

Managing Editor
Jun 4, 2020 at 2:57 PM
facebook X logo linkedin

Although it may not be as conspicuous on Wall Street, Main Street has been gripped by the protests and civil unrest over the death of George Floyd. All 50 states have engaged in protests against police brutality and systemic racism since late May, and the tensions have been exacerbated by U.S. President Donald Trump's threats to deploy military to contain the rallies. It’s far from appalling to claim that large news stories can act as a major influence to investor sentiment, so what could this level of unrest mean for the stock market moving forward?

To help identify a correlation between stock market performance and protests, we needed first to define what has encompassed a protest in the past. Not including the current U.S. upheaval, we identified 12 protests since the 1992 Rodney King riots that we considered "notable." Then, using data compiled by Schaeffer's Senior Quantitative Analyst Rocky White, we looked at the S&P 500 Index (SPX) returns within four time frames after the protests died down.

SPX Protest Returns

As you can see from the table above, there is a slight underperformance after a majority of these protests, but nothing eye-opening. But what is interesting is the short-term standard deviations. The one- and three-month standard deviations following major protests sit at 2.8% and 4.9%, respectively, much slimmer than the anytime one- and three-month anytime standard deviations of 4.5% and 7.3%. What this means is that the market has been less volatile than normal following these protests in the short-term or immediate aftermath, despite the six-month return showing standard deviation hurtling past the anytime returns.

SPX Individual Protests

Meanwhile, the table above breaks down the SPX returns following each of the individual protests we calculated, also looking one, three, six, and 12 months out. A look at the six-month column shows that since 2015, four of the six protests sent stocks into the red six months out. And with those four, that six-month window encompasses or runs right up to November's Election Day. Underscoring the potential choppiness six months ahead, this time-frame is the only one where the SPX's standard deviation is higher than the anytime percentage, as referenced earlier.

Narrowing in even further, since 2015, five of the six returns following protests were in the black one-month later. In simpler terms, historical trends seem to indicate the SPX is not in any danger of significant underperformance due to the protest in the coming summer months. But with Election Day looming and the politically divisive nature of these current protests, investors should brace for a potentially choppy autumn.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI