The comeback effect: Market responses to Trump's 2024 election victory

Shaker  Ahmed; Mostafa M. Hasan; Ashrafee  T. Hossain; Samir  Saadi

doi:10.1016/j.econlet.2025.112170

The comeback effect: Market responses to Trump's 2024 election victory

Shaker Ahmed, Mostafa M. Hasan, Ashrafee T. Hossain, Samir Saadi^*

^*Corresponding author for this work

Department of Accounting and Corporate Governance

Research output: Contribution to journal › Article › peer-review

9 Citations (Scopus)

Abstract

We analyze the impact of the 2024 U.S. presidential election outcome on equity markets using an event study methodology. The results indicate significant abnormal returns in U.S. equities during the immediate post-election trading session, following Donald Trump's confirmed victory. However, this initial surge was followed by a modest reversal, suggesting fluctuating investor sentiment over time. Cross-sectional firm-level analysis shows that small-cap equities experienced the most notable positive abnormal returns. Sectoral analysis reveals varied responses: the energy sector saw substantial gains, likely due to anticipated regulatory shifts, while industries like chemicals had more moderate post-event reactions. These findings underscore the complex and varied market responses to significant political developments.

Original language	English
Article number	112170
Pages (from-to)	1-7
Number of pages	7
Journal	Economics Letters
Volume	247
DOIs	https://doi.org/10.1016/j.econlet.2025.112170
Publication status	Published - Feb 2025

Keywords

Abnormal returns
Donald Trump
Election 2024

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10.1016/j.econlet.2025.112170

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title = "The comeback effect: Market responses to Trump's 2024 election victory",

abstract = "We analyze the impact of the 2024 U.S. presidential election outcome on equity markets using an event study methodology. The results indicate significant abnormal returns in U.S. equities during the immediate post-election trading session, following Donald Trump's confirmed victory. However, this initial surge was followed by a modest reversal, suggesting fluctuating investor sentiment over time. Cross-sectional firm-level analysis shows that small-cap equities experienced the most notable positive abnormal returns. Sectoral analysis reveals varied responses: the energy sector saw substantial gains, likely due to anticipated regulatory shifts, while industries like chemicals had more moderate post-event reactions. These findings underscore the complex and varied market responses to significant political developments.",

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AB - We analyze the impact of the 2024 U.S. presidential election outcome on equity markets using an event study methodology. The results indicate significant abnormal returns in U.S. equities during the immediate post-election trading session, following Donald Trump's confirmed victory. However, this initial surge was followed by a modest reversal, suggesting fluctuating investor sentiment over time. Cross-sectional firm-level analysis shows that small-cap equities experienced the most notable positive abnormal returns. Sectoral analysis reveals varied responses: the energy sector saw substantial gains, likely due to anticipated regulatory shifts, while industries like chemicals had more moderate post-event reactions. These findings underscore the complex and varied market responses to significant political developments.

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The comeback effect: Market responses to Trump's 2024 election victory

Abstract

Keywords

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