Barchart points out that the average return of the S&P 500 after midterm elections since 1950 is 17.2%
Financial data platform Barchart stated that since 1950, the average return of the S&P 500 in the year following midterm elections is 17.2%, more than double the returns of any other year in the presidential cycle.
This data corresponds to the third year of the presidential term, which historically performs better than election years, midterm election years, and the first year of the term.
Multiple studies show that midterm election years themselves often come with higher volatility and larger drawdowns, with an average maximum drawdown of about 17% to 18%. However, once the election results are determined, uncertainty decreases, and the market typically shifts to stronger performance.
In the 19 midterm elections since 1950, the S&P 500 recorded positive returns in all 12 months following the elections, with some statistics showing an average increase in the range of 15% to 18%, and this is weakly correlated with the party controlling Congress.
Historically, the average return in the 12 months before midterm elections is lower (about 2.9% to 4.7%), while the 12 months after the elections show significant improvement, reflecting that investors refocus on corporate profits and growth once the policy path is clear.
In the analysis of the U.S. stock market cycle, such statistics are used to explain the relative strength after midterm elections, as funds tend to reallocate to stocks after uncertainty eases. Holdings that were pressured during midterm election years benefit after the elections, while periods of high short-term volatility face the risk of drawdowns.
Related analyses emphasize that historical patterns do not guarantee future performance, which remains dominated by economic and profit factors.
Source: Public information
ABAB AI Insight
Barchart and several research institutions have long tracked the presidential cycle and stock market performance. Data since 1950 shows that the average return in the year following midterm elections (the third year of the term) is about 17.2%, significantly higher than other years in the cycle. Historically, midterm election years often experience large drawdowns, followed by rebounds after the elections.
The flow of funds is influenced by uncertainty, which raises volatility and suppresses returns before elections. Once election results are determined, policy expectations become clear, leading to a reallocation of funds into stocks and driving up returns. This reflects the impact of the political cycle on market sentiment and allocation.
This observation is similar to findings in other cyclical studies regarding the differences in returns before and after elections and aligns with historical patterns of stock market rebounds following a decrease in policy uncertainty. Currently, we are approaching the 2026 midterm elections, with related historical statistics frequently cited.
Essentially, this represents a cyclical performance of pricing power: election results reduce policy uncertainty, allowing the market to refocus on fundamental pricing, driven by the influence of political events on risk premiums and subsequent profit expectations.
ABAB News · Cognitive Laws
High volatility before midterm elections, high returns after
17.2% is the historical average, not a guarantee
Funds return only after uncertainty is resolved