Fidelity: Since 1938, the probability of the S&P 500 rising in the year following midterm elections is 95%

According to Fidelity's statistics, since 1938, the probability of the S&P 500 index recording an increase in the 12 months following the U.S. midterm elections is 95%, with an average return of about 14%. In contrast, the average return in the second year of a presidential term (i.e., midterm election year) is only about 5%.

Additionally, statistics from several institutions show that after 19 midterm elections since 1950, the S&P 500 has risen in all cases in the following 12 months, with an average increase of about 15%. The weakest increase was about 1% after 1986, while the strongest was about 33% after 1954. It only declined by about 5% after 1938 and remained basically flat after 1946.

The upcoming U.S. midterm elections will be held on November 3. So far this year, the S&P 500 has risen by more than 11%, with the maximum drawdown of about 9%, which is about half of the average drawdown in midterm election years, showing stronger performance than historical norms. Fidelity points out that this pattern is not related to which party wins, but past performance does not guarantee future results.