Midterm election years have historically been a little rough on investors – more volatility, more uncertainty, and weaker returns. 2026? Not so much
The S&P 500 is up nearly 12% year-to-date. At this same point historically, the average midterm year has been roughly flat, while the average non-midterm year has gained about 9%
In other words, 2026 isn’t just beating the typical midterm year. It’s beating the average “normal” year, too. The chart below tells the story
- The Volatility Showed Up. Just Not Where Expected
Midterm years tend to make markets nervous because elections create uncertainty around taxes, spending, regulation, and economic policy.
We’ve certainly had volatility this year—but the election hasn’t been driving the bus.
Geopolitical tensions, oil prices, rising Treasury yields, and uncertainty around Federal Reserve policy have given investors plenty to worry about.
And yet, stocks have been remarkably resilient.
Why?
- Earnings Don’t Vote
Strip away the headlines and markets eventually come back to fundamentals.
Corporate earnings have remained supportive. Massive AI investment continues to pour into data centers, semiconductors, software, and infrastructure.
That’s an important distinction.
Elections matter. Policy matters. Geopolitics matter.
But companies don’t stop selling products, earning profits, investing, or innovating because it’s an election year
- History Is a Guide. Not a GPS
And that’s really the lesson of this chart.
An investor entering 2026 could reasonably have looked at history and expected a bumpier, weaker year.
The mistake would have been turning that historical tendency into a prediction.
Averages tell us what markets have typically done.
They don’t tell us what the market must do next.
*** THE TAKEAWAY
Use history to understand what could happen along the way.
Just don’t mistake the rearview mirror for the windshield
Important Disclosures:
The information and opinions provided herein are provided as general market commentary only and are subject to change at any time without notice. This commentary may contain forward-looking statements that are subject to various risks and uncertainties. None of the events or outcomes mentioned here may come to pass, and actual results may differ materially from those expressed or implied in these statements. No mention of a particular security, index, or other instrument in this report constitutes a recommendation to buy, sell, or hold that or any other security, nor does it constitute an opinion on the suitability of any security or index. The report is strictly an informational publication and has been prepared without regard to the particular investments and circumstances of the recipient.
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