Nothing says “it’s fall” quite like political advertising season. Everywhere we turn, our inboxes are suddenly very interested in what we think about the state of democracy, and ominous voices are telling us that civilization, as we know it, hangs in the balance if we don’t pay attention or donate immediately.

It’s the midterms – and open season on our emotions.

Investors tend to get jumpy this time of year, and history gives them a reason to.

Since 1950, midterm years have been the weakest for stocks, with the S&P 500 averaging about 5%. Markets simply dislike uncertainty. Once the votes are counted, things become less unclear, and that tends to be enough for investors.

What follows may surprise you. 

In the 12 months after a midterm election, the S&P 500 has averaged roughly 14%. Since 1938, stocks have posted gains in that window about 95% of the time. The markets aren’t reacting to who wins – they’re reacting to predictability. 

Elections don’t drive profits in our portfolios; corporate earnings, business spending, and economic conditions do.

This year has been an odd one. Earlier in 2026, a Federal Reserve index that tracks economic policy uncertainty rose to more than eight times its long-term average. Stocks still held up. The March dip was about 9%, which is less than half the typical midterm-year drawdown of around 19%. By mid-August, the S&P 500 was up about 14% for the year.

Will history repeat after this election?

I can’t predict that. What I do know is that the economy still looks good. We have steady job reports, strong corporate profits, and consumers are still spending. The weak spot is inflation, driven mostly by oil prices. Peace in the Middle East would help a lot.

So, what should we do? What we’ve always done. Make sure our investments are aligned with our goals and our risk tolerance – and then stay the course.

Plan well,
Barbara
 

Sept 27, 2026

 
Source:
www.fidelity.com/learning-center/trading-investing/the-surprising-truth-about-midterms-and-stocks

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