Business Insider has pointed out this relationship before, but it's worth pointing out again now that the market has been trading lower. Intrade.com has 2012 Presidential election odds for both President Obama and Mitt Romney. Currently, President Obama's odds are just over 58%.
A look at the chart below shows that there's probably no one that wants to see the market go higher than the President himself. As shown, the S&P 500 and the odds for Obama to win re-election track each other pretty closely. Last year when the market tanked, Obama's odds tanked as well. Then they picked back up again nicely as the market rallied during the first quarter of this year. Since the start of the second quarter, however, the President's odds of winning have started to tick lower once again, just as the market has dropped. Continued market weakness would surely hurt the President's re-election chances, which makes us think he'll do as much as he can (which may not be enough) to keep things from falling apart before November.
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