View Firm's Library

Understanding Midterm Election Year Volatility - June 10th 2026 Learning Spotlight | WT Wealth Management

The S&P 500’s behavior in midterm election years has developed its own reputation shaped by more than 90 years of market history. Midterm’s, the nationwide elections for the U.S. House of Representatives and one-third of the Senate is held halfway through a presidential term, introduce a political uncertainty that markets often dislike.

Historically, the middle months of midterm years tend to be more challenging for stocks. Compiled research from Capital Group shows that the S&P 500 often produces lower average returns and elevated volatility in the months leading up to the election, compared with “non” midterm years. (1) Markets frequently underperform because investors grapple with uncertainty over a reshaped Congress.

Intra-year pullbacks have often occurred before the midterm vote

One review of data going back to the 1950s notes that large market drawdowns, sometimes exceeding 10%, have been a recurring feature in midterm years, even outside recessionary environments. Below is a historical chart showing S&P 500 annual returns during U.S. midterm election years from 1950 through 2022.


S&P 500 Performance During U.S. Midterm Election Years (image)


However, the historical midterm year story doesn’t end with weakness. In fact, once midterm election results are behind the market, stocks frequently enter a strong rebound phase. As we have stated dozens of times over the years, markets hate uncertainty about the unknown. Once the unknown is known the markets reprice risk and move ahead with the new information.

In the 12 months following midterms tend to deliver above-average returns

According to historical periods dating back to the 1950s, the S&P 500 posted positive returns in every 12-month stretch following a midterm election, with average gains well above typical yearly returns. (3)

Below is the historical chart showing S&P 500 returns in the 12 months following U.S. midterm elections. This visual makes the pattern clear:


S&P 500 12-Month Performance Following Midterms (image)


This post-election strength is not surprising, it reflects the removal of political uncertainty and a renewed focus on fundamentals such as corporate earnings, economic data, and monetary policy

In summary, while midterm election years can produce choppy and volatile markets, history suggests they most-often finish strong, delivering compelling performance in the 12 months once political risks recede. The message is clear, stay the course, maintain your plan and understand the historical trends financial markets have produced in the past.

WT Wealth Management Learning Spotlights are designed to inform, inspire, and encourage meaningful dialogue between our clients and advisory team. Our mission is to demystify complex economic and investment topics, translating financial theory into clear, practical insights that support better real-world decisions.


SOURCES

  1. https://www.capitalgroup.com/advisor/insights/articles/midterm-elections-markets-5-charts.html
  2. https://www.sofi.com/learn/content/how-midterm-elections-affect-stock-market-performance/
  3. https://www.sofi.com/learn/content/how-midterm-elections-affect-stock-market-performance/



WARRANTIES & DISCLAIMERS

There are no warranties implied.
Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

View Disclosure
WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

Contact Us Today

Contact Us Today

Reach us directly at 800-825-0616
or by using the contact form below.

Your message has been sent. Thank you!
By checking this box, I consent to receive text messages related to my financial accounts and appointments from WT Wealth Management. You can reply STOP to opt-out at any time. Messages and data rates may apply. Message frequency will vary. Reply HELP for assistance. For more information refer to our Privacy Policy and SMS Terms and Conditions on our website.>
Cancel