Historical performance of US stocks after midterm elections: All 11 post-election periods saw gains without exception; divided government is more favored.

BlockBeats news, November 3 - According to CNBC, an analysis of the S&P 500's post-election performance from 1980 to 2024 shows that after 11 U.S. midterm elections between 1982 and 2022, the index rose one year later in all cases, with an average gain of 13.7%; the average gain one year after presidential elections was 13.8%.

From the perspective of party control patterns, the market has historically performed more strongly under "divided government," where the White House is controlled by one party and the other party controls at least one chamber of Congress. After the 10 midterm elections and 5 presidential elections that produced such outcomes, the S&P 500 rose an average of 15% over one year, with 14 of 15 samples recording positive returns; by comparison, when elections resulted in single-party control, the average one-year gain was 11.5%.

After the three midterm elections in 1986, 1990, and 2006, Democrats controlled both chambers of Congress while Republicans held the White House. Under those circumstances, the S&P 500 fell an average of 0.5% on the first trading day after the election results, but rose an average of 3.4% after one month and 10.9% after one year.

However, Societe Generale cautioned that Federal Reserve policy and the corporate earnings cycle ultimately matter more than election results. After the 2018 midterm elections, U.S. stocks fell at one point; the Fed raised rates four times that year, and the S&P 500 fell 6.2% for the full year, but was still up 11.7% one year after the election. In addition, affected by the bursting of the dot-com bubble, the S&P 500 fell 22.1% one year after the 2000 election; one year after the 2020 election, it rose 38.3% as the market was rebounding from the pandemic-driven selloff.

The key variables in the current market remain whether the AI trade and the tech stock decline will persist. Ryan Detrick, chief market strategist at Carson Group, believes that as long as the AI wave continues and the economy keeps growing, the bull market may remain healthy. Jim Reid, head of macro and thematic research at Deutsche Bank, emphasized that seasonal patterns do not determine market direction, concerns surrounding Iran, AI, and France will not automatically disappear, and risks such as rising global bond yields still warrant attention.