S&P 500 rose after every midterm since 1982, historical data reveals

Stock markets often experience nervous trading ahead of midterm elections, but history shows equities usually rebound once voting ends. An analysis of S&P 500 performance from 1980 through 2024 reveals that the benchmark gained an average of 13.7% in the year following midterms. In fact, the index posted positive 12-month returns after all 11 midterms held between 1982 and 2022.

Divided government delivers stronger gains

Short-term reactions can remain choppy, with the index averaging a modest 0.2% rise after one day and 1.1% after one month. Over the course of a full year, however, returns were positive across 91% of both presidential and midterm cycles. Market analysts point to post-election relief as a key driver when campaign uncertainties lift.

Historically, investors have preferred political gridlock. Across 15 elections that produced a divided government, where no single party held both the White House and Congress, the S&P 500 rose an average of 15% after one year. This compared to an average 11.5% gain under single-party control. In three past midterms where Democrats took Congress while a Republican led the White House, the index averaged a 10.9% gain after one year despite slipping 0.5% on the first day.

Broader economic trends still dominate

Election outcomes can still be overshadowed by broader market cycles. The worst post-election performance since 1980 occurred after the 2000 vote, when the dotcom crash pushed the index down 22.1% over the following year. Conversely, the market gained 38.3% in the year following the 2020 election as stocks recovered from pandemic-era selloffs.

Analysts note that corporate earnings and central bank decisions typically carry more weight than political results. For instance, four interest rate increases by the Federal Reserve dragged stocks down in 2018 despite the midterms. Current investor attention remains fixed on the artificial intelligence boom, bond yields, debt troubles in France, and potential escalations involving Iran.