Some investors have midterm election jitters. Here’s what history shows about stocks — SkimNews
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- Morgan Stanley Wealth Management's quarterly retail investor pulse survey of 953 U.S. investors, conducted Oct. 1-23, found 48% are concerned about the Nov. 3 midterms' potential impact on the stock market; Parsons Capital Management's John Mullen said midterms have become a topic of conversation in almost every client meeting this summer and fall.
- Nationwide Retirement Institute's Aug. 24-Sept. 11 survey of 2,029 investors with at least $10,000 in investable assets found 56% feel more anxious because of the elections and 75% believe the results could meaningfully affect their long-term financial plans.
- Michael Townsend of Charles Schwab found the president's party has gained House seats in only three midterm elections since 1906; polls as of Oct. 28 put Democrats about 9 percentage points ahead on the generic ballot, and Democrats are also narrowly favored in the Senate, with the new Congress scheduled to convene Jan. 3 in a divided government.
- Janus Henderson's 50-year review found the S&P 500's annualized price returns were 8.73% under unified government versus 9.24% under divided control, with higher volatility in split-control years — a case, its Seth Meyer writes, that 'gridlock may be good' — while Capital Group found median annualized volatility since 1970 ran nearly 16% in midterm years versus 13% in other years.
- Michael Gibb of Godsey & Gibb Wealth Management said the market has rebounded in almost every post-midterm case as investors get the jitters out; Townsend's analysis puts the S&P 500's average gain at 5.7% in the three months after midterms since 1974, positive in 11 of 13 years, and 12.4% over six months, positive in all 13, with Fidelity Investments' 1950-2023 cycle study showing 14.7% in the third year.
- Sung Won Sohn of SS Economics found the post-midterm economic record is mixed: across 19 midterm cycles from 1950 through 2022, growth accelerated in nine, slowed in nine and was unchanged in one, while inflation declined in 11 of 19 post-midterm years and average inflation slipped only from about 3.63% to 3.56%.
- S&P 500 lost 18.11% in 2022, then returned 88.11% from the start of 2023 through the end of 2025 and 14.17% so far this year through Oct. 28; Gibb said investors left overexposed to stocks should return to a calculated risk tolerance, while Mullen warned against emotional moves such as going all to cash.
Why it matters: The real exposure isn't the House result but portfolio drift: the S&P 500 returned 88.11% from the start of 2023 through end-2025 and 14.17% year to date through Oct. 28, leaving some investors with an 80/20 target holding more stocks than they intended. For them, rebalancing to a chosen risk tolerance, not the election outcome, changes the portfolio.
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