The worse President Bush does in the polls, the better it is for the stock market, according to Ned Davis Research, provided he doesn't fall too far. The Venice, Fla.-based research firm, which has been tracking the correlation between presidential popularity and market performance since 1959, explains that in weeks when presidential approval ratings dipped below 50%, the stock market rose at an annualized rate of more than 9%, while a rating of 65% and above would see a 2.6% annual growth rate in stocks.
On the other hand, when a president's approval rating drops below 38%, the Dow Jones average will find itself off by 2%. Some of the reasons for the phenomenon, according to the firm, cited by Slate, are that it takes time for bad economic news to take its toll in a presidential poll, while when people feel good about the president and the economy – historically they usually pour in the most money into the market just as its about to drop. Even the Davis firm admits it's just a sentiment indicator, noting that how well the public likes the president often has little to do with the economy.
On the other hand, when a president's approval rating drops below 38%, the Dow Jones average will find itself off by 2%. Some of the reasons for the phenomenon, according to the firm, cited by Slate, are that it takes time for bad economic news to take its toll in a presidential poll, while when people feel good about the president and the economy – historically they usually pour in the most money into the market just as its about to drop. Even the Davis firm admits it's just a sentiment indicator, noting that how well the public likes the president often has little to do with the economy.
