THE IDEA IN ONE LINE
Bumpy before the vote, higher a year later: so far, every time since 1950.
19 midterms since 1950, 19 rises a year later.
-17.5%average biggest dip during a midterm year
+15.5%average change in the 12 months after the vote
19 of 19midterms followed by a 12-month rise
+15.5%average 12 months after
-17.5%average dip in midterm years
+14.0%S&P 500 in 2026 so far
There is a popular piece of market folklore about US midterm elections, and it is often told backwards. The pattern is not that stocks fall after the vote. It is that they tend to stumble before it, and then rise afterwards.
We checked it against the daily record of the S&P 500, the index of 500 large US companies, going back to 1927. Here is what the numbers show.
In all 19 midterm elections since 1950, the S&P 500 was higher 12 months after the vote, by +15.5% on average. Midterm years themselves are usually rough: the index's biggest fall within the year has averaged 17.5%, more than in any other year of a president's term.
A year after the vote: up every time since 1950
Take the S&P 500's last close before each midterm election day and compare it with its level one year later. From 1950 to 2022, every one of the 19 results is positive.
The S&P 500 rose in the year after all 19 midterms since 1950
Change in the S&P 500 over the 12 months after each midterm election
See the data
| Year | Jan 1 to election | Largest fall in the year | 12 months after |
|---|---|---|---|
| 1930 | -20.1% | -44.3% | -36.8% |
| 1934 | -9.5% | -29.3% | +42.6% |
| 1938 | +27.3% | -28.9% | -5.1% |
| 1942 | +9.1% | -17.8% | +24.3% |
| 1946 | -11.7% | -26.6% | +0.1% |
| 1950 | +15.3% | -14.0% | +16.2% |
| 1954 | +28.1% | -4.4% | +33.2% |
| 1958 | +28.9% | -4.4% | +11.1% |
| 1962 | -18.4% | -26.4% | +24.8% |
| 1966 | -12.7% | -22.2% | +12.9% |
| 1970 | -9.3% | -25.9% | +13.7% |
| 1974 | -25.1% | -37.6% | +22.0% |
| 1978 | +0.1% | -13.6% | +4.9% |
| 1982 | +10.5% | -16.6% | +21.7% |
| 1986 | +16.3% | -9.4% | +1.3% |
| 1990 | -11.0% | -19.9% | +24.0% |
| 1994 | -0.7% | -8.9% | +27.8% |
| 1998 | +14.5% | -19.3% | +21.9% |
| 2002 | -20.9% | -33.8% | +15.8% |
| 2006 | +10.5% | -7.7% | +6.9% |
| 2010 | +6.2% | -16.0% | +4.5% |
| 2014 | +9.2% | -7.4% | +4.2% |
| 2018 | +2.4% | -19.8% | +12.4% |
| 2022 | -20.1% | -25.4% | +15.1% |
| 2026 | +14.0% | -9.1% | not yet |
The smallest gain came after the 1986 election: +1.3%, a year that included the stock market crash of October 1987. The largest came after 1954: +33.2%. The middle result was about 15%.
For comparison, if you pick any day since 1950 and look 12 months ahead, the S&P 500 rose about three times out of four, by an average of 9.5%. So the years after midterms have been unusually good, not merely normal.
Go back further and the record is not perfect. The year after the 1930 midterm, in the Great Depression, the index lost 36.8%. After 1938 it fell 5.1%, and after 1946 it was flat. Counting from 1930, 22 of 24 post-midterm years were positive.
Optional: how the 12-month change is calculated
Take 2022. The election was on 8 November. The S&P 500 closed at 3,806.80 the day before and at 4,382.78 on 8 November 2023.
4,382.78 ÷ 3,806.80 = 1.151
(1.151 − 1) × 100 = +15.1%
This is the change in the index price only. Including dividends, investors earned a little more.
Before the vote: the dip
The other half of the pattern happens earlier. Within each calendar year, measure the biggest fall from a high to a later low. In midterm years since 1950, that fall has averaged 17.5%. In the other three years of a presidential term it has averaged between 11.2% and 13.3%.
Midterm years bring the deepest dips
Average largest peak-to-trough fall of the S&P 500 within the year, by year of the presidential term, 1950–2025
See the data
| Year of the term | Average largest fall | Years |
|---|---|---|
| Year 1 (after a presidential election) | -13.3 | 19 |
| Year 2 (midterm) | -17.5 | 19 |
| Year 3 | -11.2 | 19 |
| Year 4 (presidential election) | -12.8 | 19 |
Some midterm years were brutal: the index fell 37.6% at its worst in 1974, 33.8% in 2002 and 25.4% in 2022. Others were calm, like 1954 and 1958, with falls of just 4.4%. The lowest point often came in late summer or early autumn, a few weeks before the vote.
Why might this happen?
Nobody has proved why. These are the most common explanations, and each is a hypothesis rather than a law:
- Uncertainty, then relief. Before a midterm, investors cannot know which party will control Congress, and with it taxes, spending and regulation. Once the result is known, that uncertainty disappears, whichever way it goes.
- Gridlock can calm markets. The president's party usually loses seats, as our chart of 80 years of midterms shows. A divided Congress passes fewer big laws, so fewer sudden policy changes.
- The presidential cycle. Some analysts argue that presidents push for a strong economy in the two years before they or their party face the next presidential election.
There is also a simpler possibility: chance. Nineteen cases is a small sample, and markets rise in most years anyway.
2026 has not followed the script
This year looks different so far. The S&P 500 closed 2025 at 6,845.50 and stood at 7,805.45 on 13 Oct 2026: +14.0% for the year. Its biggest fall, 9.1% between late January and the end of March, around the start of the war with Iran, was about half the usual midterm-year dip.
2026 has broken the usual script so far
S&P 500, end of each month, with the last close of the previous year = 100
- Average midterm cycle, 1950–2022
- 2026
See the data
| Month | Average midterm cycle | 2026 |
|---|---|---|
| Jan, midterm year | 99.1 | 101.4 |
| Feb, midterm year | 99.4 | 100.5 |
| Mar, midterm year | 100.6 | 95.4 |
| Apr, midterm year | 100.3 | 105.3 |
| May, midterm year | 99.8 | 110.7 |
| Jun, midterm year | 98.0 | 109.6 |
| Jul, midterm year | 99.1 | 109.4 |
| Aug, midterm year | 98.6 | 112.3 |
| Sep, midterm year | 98.3 | 111.8 |
| Oct, midterm year | 100.7 | 114.0 |
| Nov, midterm year | 103.4 | |
| Dec, midterm year | 104.6 | |
| Jan, year after | 108.8 | |
| Feb, year after | 109.9 | |
| Mar, year after | 111.9 | |
| Apr, year after | 115.6 | |
| May, year after | 115.2 | |
| Jun, year after | 117.2 | |
| Jul, year after | 118.6 | |
| Aug, year after | 119.0 | |
| Sep, year after | 117.9 | |
| Oct, year after | 117.2 | |
| Nov, year after | 118.4 | |
| Dec, year after | 121.7 |
So the usual question, “will the market recover after the vote?”, does not quite apply: there is no deep dip to recover from. The risks are elsewhere. The Federal Reserve raised interest rates in September, mortgage rates are above 7% and oil is above $100 a barrel. Our report on the US economy before the midterms shows those numbers in charts.
What this pattern cannot tell you
- It is not a forecast. A pattern seen 19 times can break the next time. Before 1950 it did break.
- Averages hide the path. Even good 12-month periods included sharp falls along the way, like the crash of October 1987.
- Prices only. These figures leave out dividends and are not adjusted for inflation.
- Not advice. Plain Economy explains data; it does not tell anyone what to buy or sell. As the US Securities and Exchange Commission reminds investors, past performance does not necessarily predict future results.
Other analysts who have run the numbers find the same shape with slightly different figures, depending on their start year and method: LPL Financial counts gains after all 18 midterms since 1954, and data from Longview Economics cited by The Motley Fool puts the average 12-month gain at 14.8% across 25 midterms since 1926.
Sources
- S&P Dow Jones Indices: S&P 500
- Yahoo Finance: S&P 500 (^GSPC) daily history, used for the calculations
- Seeking Alpha: Midterm years tend to sink stocks, but they rebound strongly a year later (LPL Financial)
- Benzinga via Webull: post-midterm rally, LPL Financial data since 1954
- The Motley Fool: Why history isn't on the side of the S&P 500 in 2026 (12 January 2026)
- Investor.gov (SEC): Investor Bulletin, Performance Claims
All returns calculated by Plain Economy from daily index closes; see “See the data” under each chart. Educational content, not investment advice.