Is the market due for a post-election rally? History Suggests Yes:
These are the median annualized returns from 1900 through 2021, freshly tabulated by Ned Davis Research for the different years of a presidential term, using the Dow:
12.7 percent for Year 1.
3.1 percent for Year 2, the midterm year.
14.8 percent for Year 3, the pre-election year.
7.4 percent for Year 4, the election year.
Ned Davis Research ran the numbers a second time, for 1948 through 2021, using the S&P 500 and a predecessor index. The S&P 500 is a broader proxy for the overall U.S. stock market than the Dow, but it has a shorter history. While the details were different, the pattern remained the same:
12.9 percent for Year 1.
6.2 percent for Year 2.
16.7 percent for Year 3.
7.3 percent for Year 4.
Capital Group has research that suggests the same:
“The silver lining for investors is that after these bouts of volatility, markets tend to rebound strongly in subsequent months... Since 1950, the average 1-year return following a midterm election is 15.1%, more than double that of all other years during a similar period.