Stocks After Midterm Elections: 80 Years of Data

How the S&P 500 did in the year after every US midterm election from 1946 to 2022, and why the pattern held through recessions, wars and lost majorities.

midterm elections from 1946 to 2022 that were followed by a higher S&P 500 one year later

01Every Midterm Since 1946

In nine of those midterms the president's party lost control of the House or the Senate, or both. You might expect the stock market to take that badly.

It hasn't. Measured from the last close before Election Day to one year later, the S&P 500 was higher after every midterm from 1946 to 2022, with an average gain of +14.8% and a median of +14.2%.

That is well above a normal year. Using the same early-November starting point for every year from 1946 to 2022, the average 12-month gain was +8.7%, and only 59 of 77 years were positive. Strip out the midterm years and the rest averaged just +6.5%.

Price change from the last close before each midterm Election Day to the close one year later. 1946 to 1954 use the S&P 90 Composite, the S&P 500's daily predecessor. Blue bars are years with a Democratic president, red with a Republican.

The best year was 1954 to 1955, up +33.0%. In the S&P 500 era proper, the best was 1994 to 1995 (+26.6%), the year after Newt Gingrich's Republicans took the House. The weakest was 1946 to 1947 (+0.8%), which came right after the post-war crash of September 1946. Since 1950 the weakest was 1986 to 1987 (+2.0%), and that window included the October 1987 crash. The market still finished the year ahead.

02The Full Record

Seat changes are for the president's party, from the American Presidency Project at UC Santa Barbara; other sources sometimes differ by a seat or two. The after column shows which party held each chamber once the new Congress was seated. Index levels are closes; changes exclude dividends.

Look down the right-hand column and the pattern holds no matter what happened in the election. It held when the president's party was wiped out (1946, 1994, 2010), when it gained seats (1998, 2002), and when nothing much changed. It held under Democrats and Republicans, in years with a recession already under way on Election Day (1970, 1974, 1982 and 1990) and in years at war.

03Midterm Years Versus Every Other Year

The flip side is that the midterm year itself has been, on average, the weakest of a president's four years. Midterm years also brought the deepest drops along the way: at its worst point the index was down an average of about 18% from its high, against about 12.5% in other years.

That third year, the year after a midterm, has been the strongest of the cycle by a wide margin. It was positive in 17 of 20 cases since 1946, and the three that weren't (1947, 2011 and 2015) were essentially flat.

04Buying the Midterm-Year Low

Because midterm years tend to be choppy, the most striking numbers come from the bottom. In every midterm year since 1946 the S&P 500 hit a low at some point in the year, and one year after that low it was higher every time, by an average of +30.6% (median +32.8%).

S&P 500 change from the lowest close of each midterm year to the close one year after that low.

The obvious problem is that nobody knows the low until it has passed. In 2018 it didn't come until December 24, seven weeks after the election. In 2002 and 2022 it came in October, a few weeks before the vote.

05Why It Happens

Nobody has proven why this pattern exists, and with only 20 data points nobody can. These are the explanations you hear most often:

• The uncertainty is over. Markets dislike not knowing. Once the votes are counted, investors know who controls Congress for the next two years.
• Gridlock. A president who loses a chamber can't pass much, and markets tend to like a government that can't change the rules quickly. The catch: the president's party lost House seats in 18 of 20 midterms, so there is almost no group without gridlock to compare against.
• The re-election year is coming. A first-term president has every reason to want a strong economy heading into his own campaign, and the year after a midterm is when that push shows up.
• The midterm year already took the hit. Midterm years are often weak, so the following year starts from a lower base. Part of the midterm rally is simply a rebound.

06What Could Break the Streak

Twenty for twenty is a remarkable record, but it isn't a law. A few things to keep in mind:

• It's a small sample. Twenty elections is not many, and several of them overlapped with rate cuts or recoveries from recessions that would have lifted stocks anyway.
• The window matters. The record holds from November to November and from October to October. Shift it to July through June and it breaks: Lincoln Financial found a 1.5% loss from July 2002 to June 2003.
• Some years were close calls. 1946, 1986 and 2010 were all up less than 3%. The 2006 window ended in November 2007, a month after the market peaked and just before the 2008 crash.
• Other forces did the heavy lifting. After the 2022 midterm, much of the gain came from the 2023 rally in big technology stocks and expectations that interest rates had peaked, not from the election.
• These are price changes. They leave out dividends, which would make every number bigger, and inflation, which would make the 1940s and 1970s results smaller.

07What Other Analysts Found

Most major research shops have run this study, and nearly all of them find the same pattern. Their averages differ mainly because they start counting on different days, and U.S. Bank, which goes back to 1900, finds that stocks did not rise after every midterm.

Starting on October 31 rather than Election Day captures the strong final days before most votes, which is why those averages run higher.

08More on Midterms

US Midterm Elections History: every midterm result, seat swings and control of Congress.
Who Had the Worst Performance in a Midterm Election Ever?
Which US President Had the Best Ever Result in a Midterm Election?
The Three Times the White House Gained Seats During Midterm Elections
Midterm Polls and Prediction Markets Tracker
2026 Midterm Money Tracker
Biggest Stock Market Crashes and Gains in History
US Stock Market Performance During War

Sources: S&P 500 and, before March 4, 1957, its daily predecessor the S&P 90 Composite, daily closes (Yahoo Finance ^GSPC history, checked against a second independent copy), with 2023 closes from Associated Press market reports. Window: close on the last trading day before Election Day to the close on the last trading day on or before the same date one year later; price changes only, excluding dividends. Seat changes: American Presidency Project, UC Santa Barbara. Recessions: National Bureau of Economic Research business cycle dates. Other studies as linked above; Lincoln Financial July-to-June figures via Advisorpedia.