Fidelity: 95% Probability of S&P 500 Rising in the Year After Midterm Elections

Fidelity statistics show that since 1938, the probability of the S&P 500 index rising in the 12 months following U.S. midterm elections is 95%, with an average return of about 14%. In contrast, the average return in the second year of a presidential term (midterm election year) is only about 5%. After 19 midterm elections since 1950, the S&P 500 has risen in all subsequent 12-month periods, with an average increase of about 15%. The weakest performance was approximately 1% after 1986, while the strongest was about 33% after 1954. There was only one decline of about 5% after 1938, and it remained roughly flat after 1946. This year's U.S. midterm elections will be held on November 3. The S&P 500 has risen over 11% this year, with a maximum drawdown of about 9%, which is about half of the average drawdown in midterm election years, showing stronger performance than historical norms. Fidelity notes that this pattern is unrelated to which party wins, but past performance does not guarantee future results.

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