S&P 500 Outperforms Midterm Election Year Averages

The S&P 500 continues to outperform average midterm election year benchmarks despite experiencing a market rout on August 20 and recent volatility. Historical data from 1954 through 2022 indicates that the stock market typically enters a steady uptrend in the 12 months following midterm elections, regardless of which political party controls Congress.

During this specific period, the S&P 500 never declined in the year following a midterm election, a stark contrast to a 28% decline rate observed in other years of the presidential cycle. Analysts suggest that weakness appearing before elections often results from uncertainty regarding future government policies.

Current data indicates that strong performance leading up to the midterms does not diminish subsequent gains and may, in some instances, strengthen them.