History shows S&P 500 usually up 12 months after US midterms
SPY•Deutsche Bank says the S&P 500 was higher 12 months after 22 of 24 US midterm elections since 1930, including all 20 elections since World War Two. The firm cautions that today’s index is unusually concentrated and investors are pricing in a mild Federal Reserve hiking cycle.
1. Historical pattern
The S&P 500 has been higher 12 months after 22 of 24 midterm elections since 1930, Deutsche Bank Research said in a Tuesday note. Since World War Two, the index has risen in the 12 months after all 20 midterm elections.
2. Risks to the pattern
The firm said the midterm year is usually the weakest part of the four-year cycle, with uncertainty often easing after the vote. It noted that the S&P 500 is more concentrated than in past examples, so disappointing results from a handful of mega-cap companies could weigh on the index even if most stocks rise. Deutsche Bank also said investors are pricing in the mildest Federal Reserve hiking cycle in history.
