[New York = E-Daily Seong Joowon Correspondent] Although stock market volatility is increasing ahead of the U.S. midterm elections, data shows that in all 11 previous midterm elections, the S&P 500 index was higher one year later than it was at the time of the election. Analysts note that it is worth paying attention to the effect of resolving election uncertainty rather than which party wins. However, some point out that whether this trend will repeat itself this time depends on factors such as AI investments, corporate earnings, and interest rates.

On the 2nd (local time), CNBC analyzed the returns of the S&P 500 following elections from 1980 to 2024 and found that in all 11 midterm elections held between 1982 and 2022, the index rose one year after the election. The average gain was 13.7%. This does not mean the index rose continuously immediately after the election, but rather that the index level one year later was higher than it was at the time of the election.
Ryan Dietrich, chief market strategist at Carson Group, told CNBC, “There is anxiety before the election, but once it’s over, there is a great sense of relief, and the market generally performs well.”
Performance was even better when power was divided between the White House and Congress. Combining the 10 midterm elections and 5 presidential elections in which a party other than the president’s controlled at least one chamber of Congress, the average one-year gain was 15%. The index rose in 14 of the 15 instances. Following elections in which a single party controlled the White House and both chambers of Congress, the average return was 11.5%.
Dietrich explained that the market tends to prefer a divided government over a landslide victory by a single party. This is because it becomes more difficult for one side to push through spending and policies.
The “Republican president, Democratic Congress” combination—a possible scenario this time around—also yielded positive long-term results. Following the midterm elections in 1986, 1990, and 2006, the S&P 500 fell by an average of 0.5% on the first trading day after the election but rose 3.4% one month later and 10.9% one year later.
Short-term weakness and a rise one year later can occur simultaneously. Even after the Democrats recaptured the House in the 2018 midterm elections, the stock market faced downward pressure. At that time, the Fed raised interest rates four times that year, and the S&P 500 fell 6.2%. However, one year after the election, it rose 11.7%.
The key variable in the current market is AI. Attention is focused on whether the sell-off in tech stocks will continue and whether massive investments will translate into profits and cash flow. Another variable is the possibility that pressure for investigations and regulations regarding AI infrastructure will increase if the Democrats gain control of Congress. Treasury yields, fiscal instability in France, and the course of the war in Iran are also issues that won’t be resolved by the election alone.
Jim Reid, Head of Global Macro and Thematic Research at Deutsche Bank, stated in a recent report, “Seasonality is not destiny, and concerns about Iran, AI, and France will not simply disappear on their own.” While historical post-election rallies can serve as a reference, this implies that this year, too, market fundamentals—such as corporate earnings and Federal Reserve policy—must be considered alongside them.