Election season has a way of making uncertainty feel especially loud.

Headlines, polling changes, and predictions about which party may control Congress can create plenty of questions for investors. And when markets are already navigating concerns around interest rates, inflation, economic growth, and geopolitical events, an election can feel like one more reason to worry.

But when we step away from the headlines and look at history, midterm election years offer some useful perspective.

The Road To Election Day Can Be Bumpy

Markets generally don't like uncertainty, and midterm election years have historically brought more of it.

According to Capital Group, the S&P 500 has generated an average return of 4.7% during midterm election years, compared with 9.5% during non-midterm years, based on data going back to 1930. Capital Group's research also found that volatility has historically been higher during midterm years, particularly as Election Day approaches.¹

That doesn't necessarily mean investors are reacting to one political party or another. Elections introduce questions about taxes, regulation, government spending, and other policies that could affect businesses and the economy.

Until some of those questions are answered, markets have more uncertainty to digest.

What Happens After The Midterms?

This is where history becomes particularly interesting.

Once Election Day passes and some of that uncertainty is removed, markets have historically performed well.

According to the Schwab Center for Financial Research, the S&P 500 has averaged a 5.7% return during the three months immediately following a midterm election since 1974. Eleven of the 13 periods studied produced positive returns.²

Extend that timeframe to six months, and the historical average rises to 12.4%. In Schwab's analysis, the S&P 500 produced a positive return in all 13 six-month periods following midterm elections.²

Looking even further out, Capital Group found a similar pattern. Since 1950, the S&P 500's average one-year return following a midterm election has been 15.4%—nearly twice the return of other years measured over comparable periods.¹

Of course, those numbers don't tell us what will happen after the 2026 election. Past performance cannot predict future results, and every economic and market environment is different.

But they do provide some valuable context.

It May Be Less About Who Wins

One of the biggest misconceptions about elections and investing is that a particular political outcome will automatically be good or bad for the market.

History hasn't been quite that simple.

Capital Group's research found that markets have historically generated positive long-term returns under a variety of political configurations, including periods of unified and divided government.¹

In other words, the political party controlling Washington hasn't historically been the only—or necessarily the most important—factor driving long-term investment results.

One explanation for stronger post-election performance may simply be that uncertainty begins to decline. Once investors know the election results and have a clearer picture of the policy environment ahead, markets can begin shifting their attention back toward fundamentals such as corporate earnings, economic growth, interest rates, and inflation.

That's an important distinction.

Markets don't vote. And while government policy certainly matters, investment performance over time is influenced by a much broader collection of factors.

Perspective Matters More Than Predictions 

Election years can make it tempting to react—to wait until after the election to invest, move money to the sidelines, or make portfolio changes based on an expected outcome.

The challenge is that markets are forward-looking.

Capital Group's analysis of historical midterm election years shows that markets have often begun strengthening in the weeks leading up to Election Day and continued rising afterward.¹ That means an investor waiting for election uncertainty to completely disappear before making a move could potentially miss part of a market recovery.

That makes consistently timing an election-related market move extremely difficult.

Instead of trying to predict what Washington—or the market—will do next, we believe investors are generally better served by focusing on the things they can control: maintaining an appropriate investment strategy, staying diversified, and making decisions based on their individual goals and financial plan.

Keeping The Election in Perspective

There will be plenty of election headlines between now and November, and some market volatility along the way wouldn't be unusual.

History doesn't guarantee what happens next. But it can remind us that periods of political uncertainty aren't new—and neither is the market's ability to move beyond them.

For long-term investors, an election is one event within a much longer financial journey.

Rather than allowing short-term political uncertainty to drive long-term financial decisions, this may be a good time to revisit your goals, review your portfolio, and make sure your investment strategy continues to reflect the bigger picture.

If you have questions about how current market conditions or the upcoming election may affect your financial plan, our team is always here to help. Contact us today! 

Johnathon Opet, CFP® is a financial advisor located at EmVision Capital Advisors, 251 W. Garfield Rd. ​Suite 155, Aurora, OH 44202. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (330) 954-3770 or at info@emvisioncapital.com.

Sources
1. Capital Group, How U.S. Midterm Elections May Affect Markets, 2026.

2. Schwab Center for Financial Research, What the 2026 Midterms Could Mean for the Markets, August 2026.

Past performance is no guarantee of future results. The S&P 500 Index is unmanaged and cannot be invested in directly.

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through EmVision Capital Advisors, LLC are separate and unrelated to Commonwealth. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network. Registration as an Investment Adviser does not imply any level of skill or training.