S&P 500 Heads Into November With Two Bullish Signals as Midterm Election Odds Shift

• The S&P 500 gained an average of 15.5% one year after seven US midterm elections in which the president’s party lost both chambers
• November stock performance has historically been strong, with the S&P 500 averaging a 2.1% gain since 1980
• Wall Street is watching US midterm elections and November seasonality for potential signals about the US stock market

The S&P 500 is now heading into November with two historical trends drawing attention from Wall Street. The upcoming US midterm elections could bring a shift in political power, which could shift momentum for the S&P 500 stocks to rally ahead. At the same time, November has been a historically bullish month for the index, keeping the investors hooked for now. What are these two historical trends all about?

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US Midterm Elections May Support An S&P 500 Rally

The US midterm elections could bring a major shift in the index’s behavior, based on historical trends. The platform cited Axios to share a new narrative, adding how the probability of Democrats winning both the House and the Senate now stands at 73%. This is a prediction-market probability, not a polling result. Such an outcome may leave Trump facing an opposition-controlled Congress for his term.

Compared with the earlier US midterm cycles, the S&P 500 index has performed positively in certain historical cases following such elections. Per the data shared by the Kobeissi Letter, the S&P 500 has gained an average of 2.1% one month after seven instances since 1954, when the president’s party lost control of both chambers. The average gains increased to 10.7% after 3 months, 17.5% after six months, and 15.5% after one year.

The index was also noted to record positive returns in all seven instances.

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November Has Been Good for the US Stock Market in General

At the same time, another historical trend signals how November has been a bullish month for the S&P 500. Per the historical data shared by the Kobeissi Letter, the index has gained 2.1% in November since 1980. The longer data points out how the index has recorded an average gain of 1.6% with positive returns standing at 69% since 1964. November 2020 delivered the highest return with the index gaining approximately 10.8%.

Midterm elections have also been historically bullish for the US stock market. Since 1950, the S&P 500 has gained an average of 2.7% during November in midterm elections, with a positive return of 78.9% in most cases.

These historical figures do not guarantee future gains, as factors such as inflation, interest rates and corporate earnings also influence the S&P 500.

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