Every four years, right in the middle of a president's term, all 435 House seats and about a third of the Senate go up for election.¹ This year's midterm is Tuesday, November 3.
Midterm years have a reputation with investors, and part of it is earned. Stocks have tended to be bumpier than usual on the way to Election Day. What gets a lot less attention is what happened afterward.
Here's what the record shows, where it's weaker than the headlines make it sound, and what it can and can't tell you about your own money.
The president's party usually loses ground
Start with the politics, because it's the most consistent pattern of all.
In the 23 midterm elections from 1934 through 2022, the president's party lost an average of 27 House seats and three Senate seats.² It lost House seats in 20 of those 23 elections. Only twice, in 1934 and 2002, did the president's party pick up seats in both chambers.³
It hasn't mattered much which party held the White House. Democrats lost 63 House seats in 2010 under President Obama. Republicans lost 41 in 2018 under President Trump.³
So a shift in Washington after a midterm doesn't catch the market off guard. It's close to the expected result. What nobody knows ahead of time is how big the shift will be and what it will mean for policy, and that part usually doesn't get clear until late in the year.²
Midterm years have been bumpier than most
Markets tend to struggle with open questions, and a midterm year has plenty of them.
Going back to 1937, the S&P 500 returned an average of 9.2% in midterm years, compared with 13.3% in all other years.⁴ That's still a positive number. It's just a smaller one.
The bigger difference shows up in the swings along the way. In the 19 midterm years from 1950 through 2022, the S&P 500's largest pullback during the year averaged 16.7%. That's the deepest average of any year in the four-year presidential cycle. The other three years averaged between 10.8% and 12.3%.⁵
Keep in mind that an average hides a wide range. In 1954 and 1958 the worst dip of the year was only 4.4%. In 1974 it was 35.9%.⁵
Timing is part of the story too. Six of those 19 yearly lows landed in October, just weeks before the vote.⁵
And a rough stretch didn't always mean a losing year. Counting dividends, the S&P 500 finished the calendar year higher in 12 of the 19 midterm years since 1950 and lower in the other seven.⁶
What happened after the vote
This is the part of the history that surprises people.
In all 19 midterm elections from 1950 through 2022, the S&P 500 was higher 12 months after Election Day than it was on Election Day. The average total return over those 12 months was 18.8%, with results ranging from about 4% to almost 39%.⁵
The turn has often started before anyone cast a ballot. On average, returns were slightly negative in each of the first three quarters of a midterm year, then rose 6.6% in the fourth quarter. Historically, that rally began a little less than a month before Election Day, and it showed up no matter which party won.⁴
Why would that be? The most common explanation is that the uncertainty goes away. Once the votes are counted, investors know what kind of Congress they're dealing with for the next two years, and they can get back to focusing on earnings, interest rates, and the economy.²
Here are the 10 most recent midterm years:
| Midterm year | Date of the year's low | Largest pullback that year | S&P 500 return in the 12 months after that low |
|---|---|---|---|
| 1986 | September 29 | -9.4% | 44.3% |
| 1990 | October 11 | -19.2% | 33.5% |
| 1994 | April 4 | -8.5% | 18.5% |
| 1998 | August 31 | -19.2% | 39.8% |
| 2002 | October 9 | -33.0% | 36.1% |
| 2006 | June 13 | -7.5% | 26.2% |
| 2010 | July 2 | -15.6% | 33.6% |
| 2014 | October 15 | -7.3% | 10.9% |
| 2018 | December 24 | -19.4% | 39.9% |
| 2022 | October 12 | -24.5% | 23.6% |
Source: First Trust, Bloomberg. S&P 500 Index total returns.⁵
One caution on that last column. It measures from the exact low of the year, not from Election Day, and nobody knows the low until well after it has passed. Two of those lows, in 1978 and 2018, actually came after Election Day.⁵ The table shows how past pullbacks ended. It isn't a signal anyone could have traded on in the moment.
Was it the election, or everything else going on?
This is where the history needs some care.
Several of the worst midterm years had very little to do with Congress. In 2018 and 2022, the pressure on stocks came from the Federal Reserve raising interest rates. In 2002, the market was still working through the collapse in technology stocks.⁴ In 1974, the country was in a recession that ran from late 1973 into early 1975.⁷
The elections happened to fall in those years. They didn't cause them.
The sample is also small. Nineteen elections is not much to go on, and a pattern that held 19 times can still miss on the 20th.
This year is a good reminder. The S&P 500 closed at a record high in mid-August and was up about 14% for 2026 at that point.⁸ Averages describe what already happened. They don't set a schedule for what comes next.
Who wins has mattered less than you'd think
It's natural to feel better about the economy when your party is in charge and worse when it isn't. The market hasn't shared that view.
The S&P 500's average annual return was 16.3% during the Obama administration and 16.0% during the first Trump administration. Those are nearly identical numbers under two presidents with very different agendas, and both were above the 10.3% average of the last 30 years.⁴
Low interest rates, healthy company profits, and new technology had more to do with those results than either party's platform did. We covered the presidential side of this in Election Year Worries? Why Staying Invested Is the Best Move For Your Money.
What this means for your plan
History doesn't tell us what stocks will do between now and November, or in the year after. It does offer a few practical takeaways.
Bumps in a midterm year are normal. A drop of 10% or more has been common in these years. Seeing one doesn't mean something is broken.
Stepping aside until it's over is harder than it sounds. The rebound has often started before Election Day and didn't depend on the result. To make that trade work you'd have to be right twice, once getting out and once getting back in. We wrote more about that in What to Do With Extra Cash Right Now.
Match your money to your timeline. Money you expect to spend in the next few years generally shouldn't be riding on what stocks do in any single year, election or not. That's true every year. Midterm years just make it easier to remember.
Keep politics and your portfolio separate. Strong feelings about an election are a good reason to vote. They're a poor reason to change a long-term investment plan. If the headlines start to get to you, Emotional Investing Can Be Expensive is worth a few minutes.
Quick answers
Do stocks usually fall in a midterm election year? Not usually over the full year. The S&P 500 finished higher in 12 of the 19 midterm years since 1950.⁶ What has been more common is a larger pullback than usual at some point during the year, averaging 16.7%.⁵
How have stocks done after midterm elections? In the 12 months after each of the 19 midterm elections from 1950 through 2022, the S&P 500 was higher every time, with an average total return of 18.8%.⁵ Past results don't guarantee that the pattern continues.
Does it matter which party wins? Historically, not much. The late-year rally in midterm years has shown up regardless of the result,⁴ and long-term returns have been driven far more by the economy and company earnings than by who controls Congress.
The bottom line
Midterm years have often been uncomfortable on the way in and better on the way out. That's a useful piece of history to keep in your back pocket when the news gets loud over the next few weeks. It isn't a forecast, and it isn't a reason to change a plan that was built around your goals and your timeline.
Sources
- USA.gov, Congressional elections and midterm elections: https://www.usa.gov/midterm-elections
- Capital Group, "How U.S. midterm elections may affect markets" (April 17, 2026): https://www.capitalgroup.com/pcs/insights/articles/midterm-elections-markets-5-charts-2026.html
- The American Presidency Project, University of California, Santa Barbara, "Seats in Congress Gained/Lost by the President's Party in Mid-Term Elections": https://www.presidency.ucsb.edu/statistics/data/seats-congress-gainedlost-the-presidents-party-mid-term-elections
- J.P. Morgan Asset Management, 2026 Midterm Election Hub (S&P 500 total return, 1937 to 2025; data as of September 18, 2026): https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-themes/us-elections.html
- First Trust Portfolios, Midterm Election Client Resource Kit, September 2026 (source: First Trust, Bloomberg; S&P 500 Index total returns): https://www.ftportfolios.com/Commentary/Insights/2026/10/2/midterm-election-client-resource-kit---september-2026
- Aswath Damodaran, NYU Stern School of Business, Historical Returns on Stocks, Bonds and Bills (S&P 500 annual returns including dividends; updated January 5, 2026): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
- National Bureau of Economic Research, US Business Cycle Expansions and Contractions: https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions
- Reuters, "S&P 500 notches record-high close as rate-hike worries ease" (August 13, 2026), as republished by Virginia Business: https://virginiabusiness.com/s-p-500-record-high-rate-hike-concerns-ease/