Hard to believe, but yes—2026 is already a midterm election year. Feels like we just wrapped up the last cycle, doesn’t it?
Regardless of your politics, history shows these years often bring extra volatility and tempered returns to the stock market. Why? Heightened policy uncertainty as Congress gets reshuffled.
Looking back since 1949:
Midterm years—the second year of the presidential cycle—have historically been the weakest, with average S&P 500 returns of 4.6%, notably lower than the long-term average of 9.6%.
Stocks have finished the year in positive territory only about 60% of the time during midterms, versus over 70% in the other years of the cycle.
I’m not suggesting you overhaul your portfolio based solely on the election calendar. Far from it—markets are influenced by far more than politics.
But this pattern is worth keeping in mind as one piece of the puzzle when shaping your outlook and risk positioning for 2026.
The silver lining? Markets have tended to rebound strongly in the year after midterms, with average gains often in the mid-teens as uncertainty clears.
