2027 Could Be a Good Year for the Stock Market

2026 | Investing for Growth Managing Volatility Client Conversations

History points to a favorable backdrop for stocks after midterms and during a president’s third year.

Regardless of which party controls Congress after the midterm elections, investors have often been rewarded. Since 1950, stocks have generated an average return of 15.17% in the year following midterm elections, compared with 7.30% in all other years. With the election in the rearview mirror, markets have often responded favorably as political uncertainty begins to fade.

FIGURE 1

Stock Returns Following Midterm Elections Have Typically Outpaced Other Years
S&P 500 Index Returns One Year After Midterm Elections

Chart Data: 1950-2023. Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only. Returns are calculated beginning on Election Day. Source: Morningstar, 8/26.

The post-midterm effect is just one part of the story, though. The third year of a president’s term has historically been the strongest of the four-year presidential cycle, often delivering returns well above the long-term average. Some attribute this pattern to efforts to stimulate the economy ahead of the next presidential election.

FIGURE 2

The Third Year of a Presidential Term Has Been the Strongest for Stocks—By Far
Average Annual S&P 500 Index Returns by Presidential Term Year Since 1950

Chart Data: 1950-2023. Past performance does not guarantee future results. For illustrative purposes only. Returns are calculated beginning on Inauguration Day. Source: Morningstar, 8/26.

A financial professional can help you build a portfolio that’s right for you despite political uncertainty.

S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.

Investing involves risk, including the possible loss of principal.

Diversification does not ensure a profit or protect against a loss.

This material is provided for educational purposes only.

CCWP126 5810210