The six months from November through April have historically been the strongest part of the presidential election cycle for the U.S. Stock market when they follow midterm elections. Since the S&P 500 began in 1957, its average November-to-April return has been higher in the post-midterm period than in the comparable periods of the other three years, and no comparable post-midterm stretch recorded a loss.
That historical pattern has also held when stocks performed unusually well before the midterms. The S&P 500 had gained more than average since April 30 in the period covered by the analysis, but earlier strong performance did not reduce the likelihood of gains during the following post-midterm period.
Their study found that equity premiums, mutual-fund flows and real-investment growth were significantly higher in the months after midterms, while Treasury premiums were lower. The findings were consistent with higher asset prices accompanying lower expected discount rates as post-election uncertainty declined.
The study identified midterm elections as more important for these asset-pricing patterns than presidential elections and found that the effect was robust across different measures of uncertainty. The historical record indicates a favorable tendency, not a guaranteed result for any particular election cycle.