Stocks Have Risen a Year After Every Midterm Since 1950. Here’s What That Does and Doesn’t Tell You.

For every midterm election since 1950, the stock market has risen one year later, demonstrating an average gain of around 15%. This trend, observed by LPL Research, may offer reassurance for investors willing to endure short-term fluctuations. The historical pattern is likely influenced by the uncertainty surrounding election outcomes.

Midterms typically see the S&P 500 perform poorly in September, but the index has historically rebounded strongly in October and November, averaging gains of 3% and 2.7%, respectively. However, in 2026, the market has deviated from this pattern, with investors facing volatility driven by concerns over inflation, interest rates, and potential AI development slowdown.

Inflation remains elevated at a 12-month rate of 3.7%, while the likelihood of a December Fed rate hike looms. Meanwhile, the AI boom may continue to fuel robust earnings growth through 2027, but capital expenditure plans may face challenges. Despite these uncertainties, history suggests that investors who can withstand short-term market swings often reap rewards, particularly as conditions seem to align against an S&P 500 rally.

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