After a down year in 2022, the S&P 500 (SNPINDEX: ^GSPC) has pulled off three consecutive years of double-digit gains (16% in 2025, 23% in 2024, and 24% in 2023). It’s only the eighth time that this has happened since 1926.
Who knows what 2026 holds for the stock market’s most popular index? But with the U.S. midterm elections in November, there’s an interesting pattern worth noting. It’s a historical pattern that could work in investors’ favor — but there’s a catch.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
History shows that the S&P 500 often hits a rough patch in the year leading up to the midterm elections. The good news is that in the 12 months after, the S&P 500 has typically gone on a good run.
|
Midterm Date |
Largest Drawdown Before Midterm |
S&P 500 Returns Post-Midterms (12m) |
|---|---|---|
|
Nov. 8, 2022 |
(25.4%) |
13.6% |
|
Nov. 6, 2018 |
(10.2%) |
12% |
|
Nov. 4, 2014 |
(7.4%) |
4.5% |
|
Nov. 2, 2010 |
(16%) |
2.1% |
|
Nov. 7, 2006 |
(7.7%) |
6.6% |
|
Nov. 5, 2002 |
(33.8%) |
14.9% |
|
Nov. 3, 1998 |
(19.3%) |
22% |
|
Nov. 8, 1994 |
(8.9%) |
25.9% |
|
Nov. 6, 1990 |
(19.9%) |
24.7% |
|
Nov. 4, 1986 |
(9.4%) |
1.9% |
Data source: Longview Economics. Drawdowns are the biggest declines from peak to trough.
These are just the past 10 midterms, too. Dating back to the 1926 midterm, the average S&P 500 returns in the 12 months after are 13.6%. The only two times that it finished negatively were after the 1930 and 1938 midterms.
Every situation is different, but one broad reason this tends to be the case is that there’s more certainty after the midterms. Leading up to it, there’s a chance new leadership could mean new regulations, tax rule changes, or anything that could throw corporate America off. After the midterms, the landscape is much more predictable (relatively speaking).
It’s important to remember that past results don’t guarantee future results. Seeing this trend doesn’t mean you should avoid investing until the midterm or rush to put lump sums in right after the midterms, assuming it’s guaranteed.
More than anything, this should be a reminder of how volatile the market tends to be. The S&P 500 has been a roller coaster ride since the beginning, but one thing has remained true: It has grown over time.
The best approach for most investors is to use dollar-cost averaging. When you dollar-cost average, you set a fixed investment schedule and stick to it regardless of stock prices. You’ll inevitably invest when prices are high, and you’ll inevitably invest when they’re cheaper. The key is forcing yourself to remain consistent and trusting that it will work out over time.
Before you buy stock in S&P 500 Index, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $431,111!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,105,521!*
Now, it’s worth noting Stock Advisor’s total average return is 906% — a market-crushing outperformance compared to 195% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of February 4, 2026.
Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
History Says the S&P 500 Could Rise After This Happens in 2026 was originally published by The Motley Fool