Looking Beyond the Headlines During the 2026 Midterm Election Season

Election season is back, and the public’s focus is shifting to the November midterm congressional races, along with numerous state and local ballots.

This year’s election season will likely unfold against the backdrop of the conflict in Iran, which has heightened inflation concerns and added to the unease that often accompanies midterm elections. Historically, such periods have produced higher volatility in financial markets, and this year has proved no different.

But investors shouldn’t let short-term market anxiety hamstring their long-term decisions. History has shown that when the midterm dust settles, stocks typically have advanced — regardless of outcomes or which party controls Congress. In the meantime, try not to let the midterms overshadow other market factors as you focus on a sound long-term investment plan.

Why Are Markets Volatile During Midterm Election Years?

It’s understandable for markets to feel more uncertain as midterm elections approach. Election outcomes can shape policy priorities, and those policies may affect the economy and financial markets.

This year, the narrow balance of power in Congress has added another layer of uncertainty. Republicans held a slim majority in the U.S. House of Representatives as of early August, while several competitive Senate races could influence which party controls that chamber.

Historically, the president’s party has often lost House seats in midterm election years. Since World War II, the president’s party has lost House seats in 18 of 20 midterm elections, underscoring how midterms can shift expectations for future policy priorities.¹

But the midterms are far from the only factor increasing market uncertainty this year. The stock market fell sharply in March amid the onset of the conflict in Iran, then rebounded in the second quarter. Investors have also continued to assess the potential effects of artificial intelligence (AI) on the global economy and financial markets, contributing to shifts in market sentiment.

Still, midterm election years have historically been associated with higher volatility, regardless of other events.

How Has the Market Historically Performed After Midterm Elections?

Although market volatility often increases around midterm elections, history shows that stocks have historically risen after voting is over.

Since 1950, U.S. stocks have advanced in the 12 months following each midterm election. On average, the S&P 500® Index has gained 24.5% in those 12-month periods.

Those results have been consistent across different political environments, including periods when one party controlled Congress and periods when power was divided. See Figure 1. Still, past performance doesn’t guarantee future results, and election outcomes are only one of many factors that can affect markets.

Should Investors Adjust Their Portfolios in Anticipation of Election Results?

Election outcomes are difficult to predict, and market reactions can be even harder to anticipate. Even if one party controls Congress, it’s not always clear which policies will become law, how they may change during the legislative process or how markets and companies may respond over time.

That uncertainty is one reason to be cautious about making portfolio changes based on election forecasts. Instead, it may help to focus on factors within your control, such as saving consistently, staying diversified and keeping your long-term financial goals in view.

Voting is a political decision, whereas managing a portfolio is a financial one. Keeping these decisions separate can help ensure that election headlines don’t sway long-term investment decisions.