Stock market after midterm elections has usually favored the S&P 500

The stock market after midterm elections has historically been favorable for the S&P 500 over six- and 12-month periods, although the record offers little certainty about the first days or weeks after a vote. For investors, the useful takeaway is that election history supplies context, not a forecast for the next move in stocks.

The S&P 500 is a float-adjusted, market-cap-weighted index of 500 companies that measures the large-cap segment of the U.S. market, according to S&P Dow Jones Indices. That makes it a widely used gauge of U.S. equities, rather than a measure of every publicly traded stock.

What does S&P 500 history show after midterm elections?

CNBC’s analysis of 11 midterms from 1982 through 2022 found that the index rose in every case and averaged a 13.7% gain over the following year. Separately, Moneywise, citing JPMorgan strategist Jordan Jackson’s review of midterms from 1950 through 2022, reported positive 12-month returns in all 19 cycles and an average gain of 15.1%.

The Financial Times reported a similar long-run pattern, saying the S&P 500 had gained in the six months after every midterm since 1950. It also reported that buying at the final close before each midterm would have produced gains over both the next six and 12 months, with the last decline occurring after the 1946 election.

Those findings should not be treated as one interchangeable statistic. They use different starting dates, samples and measurement windows. The Motley Fool, citing Capital Group, separately reported a 15.1% average S&P 500 gain in the 12 months after midterms since 1950, excluding dividends, without establishing the same sample details reported in the JPMorgan analysis.

The near-term record is more muted. CNBC found that, across presidential and midterm elections combined from 1980 through 2024, the S&P 500 averaged a 0.2% gain after one day and one week, then 1.1% after one month. Those figures are pooled across both election types, so they are not a midterm-only result.

Does divided government lead to better returns?

CNBC’s election analysis found that 15 elections, including 10 midterms, resulting in divided government were followed by an average 15% S&P 500 gain over a year. Elections that left one party controlling the White House and Congress were followed by an average 11.5% gain. The divided-government sample is small, and the data shows an association rather than proof that political gridlock caused the difference.

Other research suggests the gap may be modest over longer periods. CNBC reported that Janus Henderson calculated annualized S&P 500 price returns of 8.73% under unified government and 9.24% under divided government over the past 50 years, while finding higher volatility with split control.

Why election history is not an investing rule

Analysts have suggested that markets may respond positively once election uncertainty clears and investors return their focus to policy and business fundamentals. That is an explanation, not an established cause.

Past episodes show why the election calendar can be overwhelmed by other forces. CNBC said the S&P 500 fell 22.1% in the year after the 2000 election amid the dotcom bust. After the 2018 midterms, the index finished that calendar year down 6.2% as the Federal Reserve raised rates four times, though it was up 11.7% a year after the election.

Société Générale told CNBC that Federal Reserve policy and corporate earnings matter more to markets than election outcomes. Broader economic and geopolitical developments can also change the result, which is why a durable historical pattern cannot determine what stocks will do after any single midterm.

This story draws on original reporting from CNBC.