What Happens to the S&P 500 After Midterm Elections?
The S&P 500 has risen in the 12 months after every midterm election since 1950, averaging about 12% to 15% depending on the source (Seeking Alpha, U.S. Bank, Motley Fool). The best year was 1954 at 33.2% and the weakest 1986 at 1.1%. It is a strong record, but the sample is small and gains can include rough stretches.
This is educational analysis, not investment advice. Figures are early Wednesday, November 4, 2026 readings and will move.
How much has the S&P 500 gained after midterms?
| Source | Average 12-month gain | What it covers |
|---|---|---|
| GNG Research, via Seeking Alpha | 15.1% | All 19 midterms since 1950, all positive |
| Motley Fool | About 14% | Every midterm since 1874; higher 84% of the time |
| U.S. Bank | 12.4% | Midterms in its study |
| LPL Research, via TradingKey | 18.2% | 17 midterms since 1954, all positive |
Averages from four sources; each uses a different start year and data set.
Why do the sources give different numbers?
They start in different years (1874, 1950, 1954), use different measures of the index, and count some elections differently. LPL's series, for example, begins in 1954. The direction agrees: gains in essentially every cycle.
What do the averages hide?
- Range: from 1.1% after 1986 to 33.2% after 1954 (Opening Bell).
- Path: the market can fall hard in between. December 2018, a month after that year's midterms, was the S&P 500's worst December since 1931.
- Midterm years themselves: the S&P 500 averaged about 7.5% in midterm years against 12.4% in others (Morningstar), and 2022 fell 18.1% for the year.
The recovery after the vote is a pattern, not a promise. This site's midterms outlook covers the pre-vote period.
Does the 2026 result change anything?
Democrats took both chambers while a Republican holds the White House, a setup studied in divided government and stock returns. The market rallied on Wednesday, but the first day tells you little about the next 12 months. See why election rallies fade.
What is a worked example of the 12-month rule?
Suppose you had invested $10,000 in an S&P 500 index fund on the day after a midterm. The sources cited on this page report an average 12-month gain of about 15%, which would turn $10,000 into about $11,500 over the year. The average hides the spread: some years returned a few percent and some far more, and the number is a historical average, not a promise.
| Outcome type | What it means | Lesson |
|---|---|---|
| Average | A single summary number | Misleading if a few years are extreme |
| Best and worst | The range of past outcomes | Shows the risk around the average |
| Hit rate | How often the 12 months were positive | Reported as every midterm since 1950, a small sample of 19 |
Nineteen observations is a small sample, and they overlap with other forces such as the 2020 recovery. The pattern is encouraging but not proof.
What should you take from the midterm pattern?
- The pattern is about 12 months, not 12 days. It says nothing about the next week.
- Uncertainty is the common thread. Stocks have often paid investors for holding through the lead-up to a vote.
- The reason is debated. Explanations include relief, political gridlock reducing surprises, and the Federal Reserve's actions in midterm years.
- It is one input. Weigh it against valuation: with the CAPE at 40.1 the starting point is expensive.
For the story of how the rally might fade, read why election rallies fade.
What explains the pattern, and how reliable is it?
Several explanations are offered, and none is proven. One is relief: uncertainty is highest before the vote and falls after it. Another is the political cycle: presidents tend to favor popular policies in the years before their own re-election, and a divided Congress passes less that could hurt markets. A third is the Federal Reserve, whose policy in midterm years has often been supportive. A fourth is simple coincidence in a small sample.
| Explanation | Evidence | Weakness |
|---|---|---|
| Relief from uncertainty | Volatility often falls after the vote | Explains the first weeks more than 12 months |
| Political cycle | Policy tends to be milder before presidential elections | Hard to measure |
| Monetary policy | Rate cuts or pauses in some midterm years | Policy depends on inflation, not elections |
| Coincidence | Only 19 observations since 1950 | Cannot be ruled out |
How should you combine this with other information?
- Valuation. A high starting valuation, as now, lowers the expected return from any starting date.
- Interest rates. Falling yields support stocks, as in the yield move after this vote.
- Earnings. Profits decide the path after the first months.
- Your time horizon. If you hold for decades, a single year's pattern matters little.
What terms should you know?
| Term | Plain meaning |
|---|---|
| S&P 500 | An index of 500 large US companies, weighted by market value |
| Total return | Price change plus dividends reinvested |
| Midterm year | The second year of a presidential term, when midterm elections occur |
| Drawdown | The fall from a peak to a later low |
| Median | The middle value of a list; less affected by extremes than the average |
| Base rate | How often something happened in past cases |
| Sample size | The number of cases behind a statistic |
Keep the base rate and the sample size in mind together: a pattern seen in 19 cases is suggestive, not conclusive, and the average hides the best and worst years.
How can you test a pattern like this yourself?
You can check the claim with free data. Download the S&P 500 total return series, list the midterm election dates, and compute the return over the next 12 months for each one. Then compute the same 12-month return from every other starting date and compare the averages.
- Step 1: list the midterm dates since 1950 (every four years, in the second year of a presidential term).
- Step 2: compute the 12-month total return from each date.
- Step 3: compare with the average 12-month return from all starting dates.
- Step 4: note the best and worst years, not just the average.
If the midterm average is not far above the all-dates average, the pattern may be just a bull market. Doing this once teaches more about statistics than any article.
What is the bottom line on the midterm pattern?
The S&P 500 has risen over the 12 months after every midterm since 1950, but the sample is small and valuation today is high. Use the pattern as mild encouragement for long-term holders, not as a forecast. Keep your allocation steady, keep investing on a schedule and expect that the path will include dips.
Frequently asked questions
Does the S&P 500 usually rise after midterm elections?
Yes. Research cited by Seeking Alpha finds gains in the 12 months after all 19 midterms since 1950, averaging 15.1%. Other sources give 12% to 18%.
What was the best and worst 12 months after a midterm?
The best was 1954 at 33.2% and the weakest 1986 at 1.1%, according to Opening Bell.
Do stocks fall in midterm years?
On average they have gained less. Morningstar finds about 7.5% in midterm years against 12.4% in other years.
Is the post-midterm gain guaranteed?
No. The sample is small, the sources differ, and prices can drop sharply before recovering.