The votes are in. The midterms are over…

And Wall Street could probably use a strong cup of coffee.

The reaction:

→ Wednesday: The S&P 500 rallied approximately 1.7%.
→ Thursday: It plunged 4.4%, erasing the previous day’s gains and then some.
→ Wall Street’s fear gauge: The VIX surged nearly 70% in a single session.

Quite the mood swing.

The ballots have been counted. Wall Street’s still counting its losses.

So what usually happens to stocks after the midterms?

Fortunately, we’ve got nearly 80 years of market history to work with.

Let’s see what history has to say.⇩

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History Likes the Afterparty …

Wall Street just had a very messy week.

History, oddly enough, doesn’t seem too concerned.

Since 1946, the S&P 500 has been higher 12 months after every completed midterm election.

That’s 20 for 20.

The average gain? About 14.7%.

But there’s more.

Historically, the market’s performance has been surprisingly similar regardless of whether Washington was politically divided.

→ Divided government: Average 12-month S&P 500 gain of 14.6%.
→ Unified government: Average gain of 14.9%.

✱ A difference of just 0.3 percentage points.

Sounds comforting. Until you look at the journey.

→ After the 2018 midterms, stocks still fell nearly 15% before recovering.
→In 2002, the drawdown topped 12%.

Both eventually finished higher a year later.

So the historical pattern isn’t exactly:

→ Election. → Buy stocks. → Relax.

There can be plenty of unpleasantness in between.↓

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The Fine Print of History…

Before we get too comfortable with that 20-for-20 winning streak, there’s another number worth looking at.

4.9%.

That’s the S&P 500’s average annual return when a Republican president has served alongside a Democratic-controlled Congress, according to Carson Investment Research data covering 1951 through 2025.

For comparison, the same study found:

→ Democratic president, divided Congress: 17% annually.

→ Republican president, divided Congress: 13.7% annually.

→ Republican president, Democratic Congress: 4.9% annually.

Quite a spread.

And a considerably different picture from the 14.7% average gain in the year following midterms.

!!! The 14.7% figure measures the 12 months after elections, while Carson’s figures measure annual returns across entire periods of different congressional arrangements.

Neither is a prediction.

And Wall Street has another problem that wasn’t around for most of those 80 years.

AI. ↓

Too Much Riding on AI?

Artificial intelligence now accounts for more than 30% of the S&P 500, according to the supplied research.

That’s a lot of market performance riding on one theme.

And Washington could make the AI boom a little more complicated.

The incoming Congress may increase scrutiny of data centers, particularly their enormous electricity and water requirements.

The scale is already raising eyebrows.

→ 12%: The share of U.S. electricity demand that data centers could account for by 2028, according to the Department of Energy.

→ 13.4%: The decline in the Nasdaq-heavy QQQ ETF over the past month, as reported November 7.

→ 70%: The approximate one-day jump in Wall Street’s fear gauge on November 5.

Of course, greater scrutiny doesn’t automatically mean new restrictions. And the selloff reflects more than policy concerns alone.

But for a market increasingly dependent on AI-related earnings, even uncertainty about future infrastructure spending can become expensive.↓

The Market Has a Short Memory…

After all those historical averages, there’s one more number worth remembering.

75%.

That’s how often an S&P 500 index fund finished higher over any 12-month period since late 1999, according to the historical analysis cited by 24/7 Wall St.

Now compare that with the six midterm elections since 2002.

→ After midterms: Positive returns in all six cases, with a median gain of roughly 9%.

→ Across all 12-month periods: Positive returns about 75% of the time, with a median gain of roughly 11%.

So even that perfect six-for-six midterm record wasn’t necessarily extraordinary.

Stocks have historically tended to rise over time, elections or otherwise.

And while the latest market swings have been unusually dramatic, the next 12 months will still depend on familiar things:
→ corporate earnings,
→ interest rates,
→ valuations, and
→ economic growth.

The election may change the headlines.

The businesses still have to deliver the earnings. ↓

* Sources: Sources: 24/7 Wall St., November 6, 2026; historical SPY returns since 1999. Figures reflect the study’s methodology and are not forecasts.

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