Bank of America wants investors who are looking at the stock market through a political lens to ‘follow the profits’.
In an analysis stretching back to 1936, the bank found a bigger divide between winning S&P 500 years based on earnings growth than on which party held the White House.
Political headlines offer plenty of reasons to feel bullish or bearish. Tariffs, taxes, and spending decisions can change the outlook for businesses, making Washington difficult for investors to ignore.
But the party in power tells only part of the story.
BofA’s comparison refocuses on what companies earn, a less dramatic subject that can get buried beneath the daily political noise.
For investors deciding what deserves their attention, the findings offer an excellent starting point.
BofA’s 68% finding puts earnings at the center of the market debate
Bank of America’s argument comes down to a striking gap.
According to the bank, earnings effectively separate winning stock market years much more sharply than political affiliation does.
As reported by Seeking Alpha, going back to 1936, BofA found that 68% of positive S&P 500 years coincided with rising earnings per share, while 32% coincided with falling earnings per share. The political split was considerably narrower: 54% under Democrats and 46% under Republicans.
That gives the earnings comparison a 36-percentage-point spread, versus eight points for party affiliation. However, these are shares of winning years, not the probability that stocks will rise under either condition.
More Wall Street:
That said, the stock market enters this debate with substantial gains. Through September 25, the S&P 500 was up 13.12% this year, 5.25% over three months, and 17.47% over six months, according to Yahoo Finance data. Its rebound from March’s low left it less than 1% below August’s high.
Next comes the Nov. 3, 2026, midterm election.
Historically, that calendar has challenged investors. From 1945 through 2025, midterm years averaged S&P 500 price gains of 3.8%, versus 10.9% in other years, according to J.P. Morgan Wealth Management. Yet fourth quarters averaged a 6.4% gain.
This year has already outpaced that full-year midterm average.
BofA’s takeaway puts the next test squarely on corporate results, in that whether profits can support further gains as investors weigh what the election could mean for taxes, spending, and business costs.
