What history actually shows us about midterm years
Since 1950, nearly every midterm election year has produced a meaningful intrayear pullback in the S&P 500. The average intrayear drop across midterm years has been about 16.7%. Uncertainty around election outcomes, potential policy shifts and investor sentiment have tended to compress returns in that pre-midterm window.
That compression may create an opportunity.
Because, historically, once the midterm passes, returns have tended to recover meaningfully.
The average 12-month return following midterm year lows has historically come in at about 36.5%. It is important to note that past performance is not indicative of future results, and these historical patterns may not repeat.
