Since World War II, the S&P 500 has risen in the 12 months after every midterm election that left a Republican president facing a Democratic House and Senate — seven for seven, averaging about 19%.
With Tuesday's results, that is the setup heading into 2027. Democrats won majorities in both chambers, and the new Congress is sworn in on January 3. Many clients are asking what divided government could mean for their portfolios. History offers a useful, if imperfect, perspective.
The historical record
Seven post-war midterms produced a Republican president with a Democratic House and Senate. Here is how the S&P 500 did in the 12 months after each Election Day.
Midterm | President | S&P 500 total return, 12 months after |
1954 | Eisenhower | 39.9% |
1958 | Eisenhower | 12.5% |
1970 | Nixon | 13.6% |
1974 | Ford | 31.2% |
1986 | Reagan | 3.0% |
1990 | George H.W. Bush | 26.5% |
2006 | George W. Bush | 7.3% |
Average / Median | 19.1% / 13.6% |
Source: The Motley Fool, "Election Year Stock Market History: What the S&P 500 Has Done After Every Midterm Since 1874" (Oct. 2026), based on Robert Shiller's stock market data set, Yale University. Total return, price plus reinvested dividends, not adjusted for inflation. Average and median calculated by Resilient Wealth Planning.
The broader record points the same way. Across all 38 midterms since 1874, the S&P 500 averaged a 14% gain in the following 12 months and rose 84% of the time, versus an 11% average for any 12-month period. Fidelity reports that since 1938, stocks posted gains in the 12 months after a midterm 95% of the time.
A pattern, not a promise
Past performance is not indicative of future results. Still, the pattern is hard to ignore: every one of these seven periods was positive, and the median gain was 13.6%. One common explanation for the post-midterm pattern is uncertainty. Markets tend to struggle in the run-up to an election, then steady once results are known. Divided government also tends to limit sweeping policy changes, which some investors view as a source of stability.
What this means for your plan
Elections make headlines, but they rarely change a sound long-term strategy. History suggests that staying invested through political transitions has generally been rewarded. Trying to time the market around election outcomes has not.
If you have questions about how the new Congress could affect your taxes, portfolio or financial plan, reach out to us at hello@resilientplanning.com.
Sources
- The Motley Fool, "Election Year Stock Market History: What the S&P 500 Has Done After Every Midterm Since 1874"
- Fidelity, "The Surprising Truth About Midterms and Stocks"
- First Trust, "Election Client Resource Kit" (March 2026)
Disclosure: This material is for informational purposes only and is not a recommendation to buy or sell any security. Past performance is not indicative of future results. The S&P 500 Index is an unmanaged index; investors cannot invest directly in an index. Index returns do not reflect fees or expenses.