Fidelity: S&P 500 Rose in 95% of Years After Midterm Elections Since 1938

Fidelity data show a 95% probability that the S&P 500 will rise in the 12 months after a U.S. midterm election, with an average return of about 14% since 1938. According to ChainCatcher, several institutions also found that the index rose in all 19 12-month periods following midterm elections since 1950, averaging about 15%; gains ranged from about 1% after the 1986 election to about 33% after the 1954 election. The index fell about 5% in the 12 months after the 1938 election and was roughly flat after the 1946 election. By comparison, the S&P 500’s average return in the second year of a presidential term, which coincides with a midterm election year, is about 5%. This year’s U.S. midterm elections will be held on November 3. The S&P 500 has risen more than 11% this year, while its largest drawdown has been about 9%—roughly half the average drawdown in midterm election years—and its performance has been stronger than historical norms. Fidelity says the pattern has not depended on which party won, but past performance does not guarantee future results.