Stock Market Historically Shrugs Off Midterm election Years, Data Shows
LONDON, Nov. 28, 2025 – As the 2026 midterm elections draw closer, historical stock market performance during similar periods offers a perhaps reassuring signal for investors: stocks have tended to deliver positive returns in the year of a midterm election, with an average gain of over 17% dating back to 1926. This trend, identified through a century of market data, suggests that political uncertainty surrounding the elections may not necessarily translate into market downturns.
The analysis,conducted by MarketWatch,reveals a pattern of investor resilience during midterm election years. While short-term volatility can occur around the actual election date, the overall annual performance has consistently favored gains.This historical behavior impacts a broad range of investors, from individual retirement savers to large institutional funds, and offers a potential framework for navigating the upcoming political landscape. Jamie Chisholm, a markets reporter for MarketWatch, notes that understanding these historical trends can provide valuable context, though past performance is never a guarantee of future results.
Digging into the data, the average return during midterm election years-those occurring in the second year of a presidential term-has been approximately 17.1%, considerably higher than the average annual return of 10.1% across all years as 1926. Notably, gains have occurred irrespective of which party controls the White House or Congress. The strongest midterm year was 1934, with a gain of 54.3%, while 1946 saw a more modest increase of 6.8%.
However, the data also reveals variability. There have been instances of negative returns in midterm years, including 1942 (-10.4%) and 1974 (-29.8%). The period promptly following the election frequently enough experiences a ”relief rally” as uncertainty diminishes, but this is not always the case. Investors should be prepared for potential short-term fluctuations.
Jamie Chisholm is a markets reporter based in London.
