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Political uncertainty and market regimes: Clustering evidence from the 2024 U.S. election cycle

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  • Ampountolas, Apostolos

Abstract

This study examines how financial markets shift between behavioral regimes during the 2024 U.S. presidential election cycle. Using daily data from July 2022 to February 2025, we analyze the S&P 500, European indices, Brent crude oil, and Bitcoin with unsupervised clustering methods (K-Means, DBSCAN, and Gaussian Mixture Models). We identify two distinct regimes: a normalization phase with moderate volatility and stable returns, and a high-volatility phase with market stress and negative performance around political events. Bitcoin emerges as the most sensitive asset to regime shifts. Our findings highlight the value of clustering techniques and multinomial logistic modeling in capturing nonlinear market dynamics and quantifying political impacts on regime shifts.

Suggested Citation

  • Ampountolas, Apostolos, 2025. "Political uncertainty and market regimes: Clustering evidence from the 2024 U.S. election cycle," Finance Research Letters, Elsevier, vol. 86(PB).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pb:s154461232501671x
    DOI: 10.1016/j.frl.2025.108417
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