What Happens to Stocks if a President Is Assassinated?

The recent assassination attempt on Donald Trump raises many questions about American democracy and the current social and political climate. One thing that hasn’t responded dramatically is the US stock market. In fact, the Dow closed at a record high on the first trading day after Trump was shot.

With unexpected headlines often triggering selloffs in the stock market, this result may seem unusual. A look back at the history of presidential assassinations, however, shows that it’s not that strange for stocks to have a minimal reaction when major political figures are shot or killed.

We examine the financial fallout of the four presidential assassinations in American history to get a sense of what happens to stocks when a president is assassinated.

Abraham Lincoln

America’s first and most famous presidential assassination was that of Abraham Lincoln in 1865.

Though every American schoolchild is familiar with the details of the actual killing at Ford’s Theater, the behavior of the markets at the time receives much less attention.

It’s worth noting here that, while America had a well-developed stock market by the standards of the 1860s, investors at the time focused much more heavily on dividends than on growth. As such, stock valuations at the time were quite different than they are today.

After Lincoln’s death, the New York Stock Exchange halted trading for a full week, one of the earliest instances of an exchange shutting down to mitigate volatility.

The exchange at the time handled just 300 stocks and bonds and had just moved into its first permanent headquarters, giving a sense of the small scale of America’s stock market in this period. This move calmed the market, thus setting the stage for comparatively little volatility when stocks began trading again.

James Garfield

The next president to be assassinated was James Garfield in 1881. Garfield’s impact on national politics and economics was limited, as he held office for just four months before being shot by Charles Guiteau. Uniquely among assassinated presidents, Garfield lingered for well over two months before dying.

In Garfield’s case, stock markets had multiple months to process the probable death of a national leader. The economy was also booming at the time, and growth continued as Garfield lay on his eventual deathbed.

As a result, Garfield’s death failed to significantly upset markets for any extended period of time.

William McKinley

Though little known today, the greatest drop in stock market prices associated with a presidential assassination occurred after the death of William McKinley at the hands of radical anarchist Leon Czolgosz in 1901.

Stocks subsequently lost about 6.2 percent of their total value as the market processed the news. Though the president lingered for several days after the shooting and stock prices spiked when he was briefly expected to recover, the market ultimately moved lower when McKinley succumbed to his gunshot wound.

In McKinley’s case, the assassination signaled a significant shift in policy that accounted for the sudden drop. At a time when markets were becoming increasingly concentrated, McKinley largely opposed anti-trust action and was famously friendly to business interests.

His vice president, Theodore Roosevelt, publicly held opposing views. As such, the drop in the stock market appears to have been an instance of investors pricing in a sudden change in the regulatory environment.

Roosevelt went on to act on his views as president, ultimately filing suits to break up over 40 of America’s largest businesses at the time.

John F. Kennedy

While the other three presidential assassinations certainly have lessons about the stock market, the fact that they occurred between 1865 and 1901 places them in a period of economic history that looks very different from today’s landscape.

The same isn’t true of the assassination of John F. Kennedy in 1963, making this assassination likely the most relevant one for modern investors to study.

Kennedy’s sudden death roiled stock markets and led to a sharp single-day decline. The S&P 500 dropped 2.8 percent, and the NYSE shut down trading early.

What happened next, however, may be the most interesting part of the lesson. In the two days following President Kennedy’s assassination, the stock market made up all of the ground it lost during the shock. For the full year of 1963, the S&P 500 ended up about 18.9 percent.

What Happens to Stocks When a President Is Assassinated?

In the four instances of presidential assassinations in American history, stocks drop by an average about 1.6 percent after a president is killed.

The significant exception to this rule occurred in the case of President McKinley. Stocks reacted sharply and negatively to the president’s demise and failed to mount a quick recovery.

This is likely a result of the policies supported by Roosevelt, whose views on business were known to be much less friendly than McKinley’s. As such, there was a sound economic reason for stocks to move lower.

It’s also interesting to note that there isn’t a massive difference in how the market treats successful and unsuccessful assassination attempts. From 1912 to 2005, there were 10 unsuccessful attempts on the lives of presidents. On average, an assassination attempt causes the market to drop about 1.1 percent.

The overall lesson from the history of presidential assassinations seems to be that markets generally react negatively for a very short period of time before quickly recovering.

Unless the death of a president results in a significant policy change under his successor, as in the case of McKinley and Roosevelt, stocks are unlikely to experience a long-term loss of value.

In this light, the market’s aloofness to the shooting of Donald Trump actually fits the pattern quite well. As an ex-president and current candidate, Trump lacks a vice-presidential successor that could drastically change national policy.

Since Trump sustained only modest injuries, the attack didn’t even change the composition of the Republican presidential ticket going into November’s election. The market, therefore, had little reason to react and instead continued to move upward on expectations of strong earnings growth and continued enthusiasm for AI technology.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.