Nov. 3, 2026, was a huge night for the Democrats, who decisively won a majority in both the U.S. Senate and the House of Representatives, as well as important governorships in key states like Texas and Pennsylvania. While the market saw some big moves in the immediate aftermath of the election results, history paints an interesting picture about where the S&P 500 (SNPINDEX:^GSPC) could be headed in the coming years.
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First, the good news. Historically, stocks perform very well in the 12 months following midterm elections. In fact, when you break the market into election cycle years that run from November to November, the period after midterms is the strongest by a wide margin.
Since 1938, the S&P 500 has produced a gain in the 12 months following midterm elections 95% of the time, and since 1950, it has averaged a 14.5% annual return.
The next-strongest year of the political cycle tends to occur in the 12 months before the presidential election, with the S&P averaging a 9.1% return since 1950. That would be November 2027 through November 2028 in this upcoming cycle.
Data source: Haver Analytics and Fidelity Investments. Periods: November to November since 1950.
More immediately, historically, the fourth quarter in general tends to be the best one for stocks overall, with the S&P 500 up 80% of the time, with an average gain of 4.2% since 1950. Those returns tend to be even stronger in midterm election years, with the benchmark index up 82% of the time, with an average gain of 6.6%.
After midterm elections, the first and second quarters of the following year are also historically very strong. Since 1950, the S&P has risen in Q1 after midterm elections 95% of the time, with an average return of 7.4%, while in Q2, the index has risen 74% of the time, with an average annual return of 5%.
Data source: Carson Group. Quarterly S&P 500 performance after midterm elections since 1950.
That all points to potentially robust returns for the market ahead. But what about the big one-day sell-off the market saw after the election?
