Midterm Election Mind-Reading: The Market Tends to Win

tags: stock market, Midterm Election



Will the Republicans win control of Congress? With summer drawing to a close, the midterm election is just two months away and this question is likely to be analyzed and debated with increasing urgency.

But for the stock market, the answer may not matter at all: The market has a tendency to rally no matter which party wins a midterm election. That’s what the historical record suggests, anyway.

In fact, from the standpoint of stock market history, political outcomes aren’t very relevant, but the calendar is. September is typically a difficult and volatile month for stocks, while in a midterm election year the clouds over Wall Street have tended to lift in October. Regardless of which side has won in a November midterm election, the market has generally prospered for the rest of the year. And it has often excelled in the next calendar year, typically the most propitious year for stocks in what is often called the four-year presidential cycle.



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