Key facts
- S&P 500 has gained an average 14% in the six months after midterm elections since 1970.
- In Republican-president midterm years, the S&P 500 has gained an average 15% in the six months following the midterms.
- Tech sector has seen average 1-year forward returns of 31% in Republican-president midterm years.
- Morgan Stanley sees S&P 500 ending the year at 8,000, implying a 12% rally from its projected low.
Wall Street forecasters are anticipating a potential stock market upswing, driven by historical patterns following midterm elections. Analysts suggest that the uncertainty surrounding these elections often clears, paving the way for significant gains. Since 1970, the S&P 500 has averaged a 14% increase in the six months after midterm elections. This trend is even more pronounced in years with a Republican president, where the index has historically seen average gains of 15% in the post-midterm period. The technology sector has shown particularly strong performance, with average 1-year forward returns of 31% in such years. Morgan Stanley predicts the S&P 500 could rally 12% from its current low to finish the year at 8,000.