Why US midterm elections could power the next stock market rally
When a president has less legislative power, lawmaking typically becomes more difficult
The US midterm elections could trigger a significant stock market rally, according to market analysts. Historically, these elections mark the beginning of a positive nine-month period for stocks, a phenomenon often referred to as the "midterm miracle." This trend is attributed to the reduced legislative certainty that arises from potential political gridlock following the election, which makes passing sweeping legislation more challenging for the following two years.
While voters may not appreciate this inaction, stocks often benefit from the decreased legislative uncertainty. Predictions suggest that the president's party typically loses congressional seats in these midterms, further contributing to the market's bullish outlook. Historically, the S&P 500 has performed well in the four quarters following midterm elections, with an 84% chance of gaining and an average return of 19.8% in US-dollar terms.
This positive impact is not limited to the US market, as the correlation between US and non-US stocks is 0.83, indicating a strong likelihood of global market gains as well.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- Why US midterm elections could power the next stock market rally businesstimes.com.sg
