WASHINGTON — Markets showed resilience following the midterm elections, with the S&P 500 historically posting strong gains regardless of the political outcome, according to analysis of index performance from 1980 through 2024.
The S&P 500 tends to perform well after both midterm and presidential elections, rising an average of 0.2% after one day and one week, and 1.1% after one month. A year after midterms, the index gained an average of 13.7%, with positive returns in 91% of cases. Notably, the S&P 500 was up after all 11 midterms from 1982 through 2022.
Historical patterns suggest markets prefer divided government. Across 10 midterm and five presidential elections that resulted in no single party controlling both the White House and Congress, the S&P 500 rose an average of 15% after one year. One-year returns were positive in 14 out of 15 divided-government scenarios. By comparison, elections resulting in single-party control saw the index gain an average of 11.5% over the following year.
Short-term performance has been less reliable, particularly after presidential contests, which have produced slightly negative average returns after one day and one week. Ryan Detrick, chief market strategist at Carson Group, said there is typically some anxiousness before elections, but "once you are through it, it's a big relief and markets tend to do pretty well."
The data also shows significant variation based on election outcomes. After the three midterms from 1986 through 2006 when Democrats controlled both houses of Congress and a Republican held the presidency, the S&P 500 averaged a 0.5% decline on the reaction day but was up 3.4% a month later and 10.9% after a year. Conversely, the S&P 500 plunged 22.1% in the year after the 2000 elections due to the dotcom bust — the worst post-election performance since 1980 — while posting its best post-election year on record with a 38.3% gain after the 2020 elections amid the COVID recovery.
Analysts note that while elections are often viewed as market-moving events, they can be coincident with other macroeconomic factors. The S&P 500's post-election performance reflects a combination of political outcomes and broader economic conditions.
