Midterm elections tend to bring bigger stock market swings, but 75 years of data show the S&P 500 has still finished green in every sixth year of a two-term presidency. Republicans hold Congress heading into the Nov. 3 vote, though prediction markets favor a Democratic takeover of at least one chamber.
Seventy-five years of market history point to a calmer outcome than the midterm jitters suggest. Since 1950, the S&P 500 has averaged a nearly 21% gain in the sixth year of a two-term presidency, according to data Carson Group's Ryan Detrick posted on X. The index is already up 11.6% year to date through the close on Sept. 9.
Midterm years bring bigger swings, not bigger losses
Midterm election years do carry more volatility than other years of a presidential term. The average intra-year correction during midterm years since 1950 has run 17.5%, a steeper drawdown than the other three years, according to Detrick.
Yet that volatility hasn't reliably meant a down year. Among the six presidents elected to two full terms over the past 75 years, year six has been green for all of them, even though the S&P 500 declined in some of their second years, including under Bill Clinton, George W. Bush and Donald Trump.
Republicans' grip on Congress faces a test
Republicans currently hold 53 of 100 Senate seats and 218 of 435 House seats, a unified government that has already passed two major tax bills: the Tax Cuts and Jobs Act, which permanently lowered the top corporate tax rate from 35% to 21%, and the "Big, Beautiful Bill," which made the TCJA's personal tax brackets permanent.
That control may not last past Nov. 3. Polymarket odds on Sept. 9 showed a 51% chance Democrats win both chambers, with a further 36% probability they take the House while Republicans keep the Senate. Over the previous 23 midterms, the president's party has lost seats in 20 of them.
Why a split Congress may not spook investors
A split Congress would make debt-ceiling negotiations more uncertain, but it also removes the odds of major new legislation reaching Wall Street, which can read as a form of certainty in its own right. Ongoing AI infrastructure spending and corporate earnings beats have also underpinned the market this year, alongside the political calendar.
Election Day is Nov. 3, with the new Congress's makeup uncertain through early January 2027.
Source: Motley Fool
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