The S&P 500 has risen in every 12-month period after a US midterm election since 1946, averaging a 14.4% gain. The column questions whether that pattern will hold amid a sharp selloff, concentrated AI-related investment and uncertainty over interest rates and recession risk.
The S&P 500 rose in every 12-month period after midterm elections between 1946 and 2022, with an average gain of 14.4% and a median return of 13.7%. The column contrasts that record with average calendar-year gains of just over 9% and a median rise of 11.6% since World War Two.
The market shed $3.2 trillion after the Republicans’ electoral drubbing, while US chip stocks fell 12% in their second-biggest drop on record, as investors worried a Democratic-controlled Congress could slow AI data-center construction. Even after the selloff, the S&P 500 was 5% below its all-time high; its maximum drawdown earlier in the year had been 9%, about half the typical midterm-year pullback of 18% to 19%, according to JPMorgan.
The column points to concentrated market exposure to a small group of technology companies, AI investment that some estimates put above $10 trillion between 2025 and 2032, and uncertainty about Federal Reserve policy. Markets are betting on another half-point of rate hikes next year, but the article says a more aggressive Fed or an economic downturn could challenge the historical pattern. The US economy has not been in recession in the year after a midterm election since 1950, according to Truist Wealth Advisory.
