r/wallstreetbets
midterms 🚀
Historical data shows S&P 500 underperforms pre-midterms but surges post-midterms, averaging 16.3% gains.
- S&P 500 historically averages 16.3% return in the year following midterm elections.
- The index has never posted a negative return in the 12 months post-midterms since 1962.
- Markets tend to underperform and experience elevated volatility in the 12 months leading up to midterm elections.
- The S&P 500 has historically declined an average of 20.6% at some point during the pre-midterm window.
for the statisticians among us (spent some Claude tokens on this)
Pre-Midterm: Markets Tend to Underperform
In the 12 months leading up to midterm elections, the S&P 500 has historically averaged just 0.3% — compared to the 8.1% historical annual average.
The index has declined an average of 20.6% at some point in the 12-month pre-midterm window, going back to 1934.
The pattern is consistent: periods of weakness and elevated volatility tend to concentrate in the first half of midterm years.
Post-Midterm: Markets Historically Surge
In the year following midterm elections, the S&P 500 has risen an average of 16.3% — nearly double its return in non-election years. Stock market returns in midterm election years themselves tend to be the most muted of the cycle at \~5.8% average.
E\*TRADE's analysis found the S&P 500 has never posted a negative return in the October-to-October period following midterms — going back to 1962. The last negative 12-month post-midterm return was in 1939, during the Great Depression and early WWII.