It's Election Day! Here's What Investors Can Expect From the Stock Market and How They Might Take Advantage Once the Winner Is Announced.

Well, we finally made it. After a switch in who the Democratic party planned to nominate, numerous controversies, and close to $16 billion in estimated campaign spending, voters who haven't yet cast their ballots today head to the polls for the last time in the 2024 election cycle to choose between Vice President Kamala Harris and former President Donald Trump. Voters will also be casting ballots for congressional candidates as Democrats and Republicans wrestle for control of the U.S. Senate and House of Representatives. According to pollsters, Republicans are favored to take the Senate while the House is still a toss-up.

With a look back at history, here's some insight into what investors can expect from the stock market and how they can position their portfolios once the winning candidate is announced.

How the stock market has performed on Election Day and the day after

There is always much anticipation leading up to Election Day because investors are trying to figure out what policies and laws certain candidates will push and how those could impact certain sectors and even individual stocks. Control of Congress is also a big deal. Here's how the broader benchmark S&P 500 has performed on Election Day, dating back to 2000.

• Nov. 7, 2000: -0.02%
• Nov. 2, 2004: 0.00%
• Nov. 4, 2008: 4.08%
• Nov. 6, 2012: 0.79%
• Nov. 8, 2016: 0.38%
• Nov. 3, 2020: 1.78%

Here's how the S&P 500 has performed on the day after Election Day, dating back to 2000.

• Nov. 8, 2000: -1.58%
• Nov. 3, 2004: 1.12%
• Nov. 5, 2008: -5.27%
• Nov. 7, 2012: -2.37%
• Nov. 9, 2016: 1.11%
• Nov. 4, 2020: 2.20%

While one day's performance means almost nothing to investors and there's no way to know what will actually happen, there are a few interesting things from this data. The largest gain on Election Day occurred when former President Barack Obama was elected in 2008. The S&P 500 gained more than 4% on Election Day that year, but then fell more than 5% the day after.

Obama inherited significant challenges including the housing crisis and the Great Recession. Investors were apparently initially relieved to see uncertainty from the election removed, but quickly grew concerned about how Obama would shape the economy.

The highest back-to-back gains for the S&P 500 in this list occurred after President Joe Biden was elected in 2020. Investors expected Biden to implement more stimulus, which they rightly thought would fuel more stock buying and other policies that would reopen the economy during the early days of the pandemic.

Given how tight the race is between Trump and Harris, it is possible that investors won't know the final results -- or even the likely winner -- on election night. This occurred in the hotly contested presidential election in 2000 between George W. Bush and Al Gore. The race was so close that it took a month before a winner was determined and involved a recount. The Supreme Court ultimately ended the recount on Dec. 12 with a 5-4 vote in favor of Bush. The S&P 500 fell roughly 4.25% between Election Day and Dec. 12, which can't be a huge surprise given the uncertainty.

Once a winner is announced...

I'm not convinced the market will immediately perform better or worse under Trump or Harris, as both have pros and cons. Trump is expected to be friendlier on tax policy but also worse for inflation. Trump has promised to issue tariffs on Chinese goods that the market struggled with previously.

Harris is expected to be better for inflation, although still inflationary, and introduce policies that could benefit low- and middle-class consumers. Consumer spending is the biggest part of the U.S. economy, so this would help overall. However, there is still a lot unknown about Harris and her policies, which could keep Wall Street on edge.

Ultimately, I would look at crypto and bank stocks if Trump wins because a Trump administration is expected to be more favorable on crypto and bank regulation. Gary Gensler, chair of the Securities and Exchange Commission, has been tough on crypto. At the same time, banking regulators have extended approval timelines for banker mergers and acquisitions and generally proposed higher capital rules, contributing to a lack of interest in the sector in recent years. Harris' policies are expected to favor homebuilders and electric vehicles. However, as billionaire investor Ken Griffin pointed out, the market may perform better regardless of who wins because there will be less uncertainty and investors will simply adapt.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.