How the the midterm elections could bring volatility to a stock market that's riding high into 2026
Wall Street is, by and large, bullish on the market's performance for next year, but one factor could throw a wrench into that: the midterms.
TL;DR
- Midterm election years tend to be the most volatile for stocks, with higher average intra-year declines for the S&P 500.
- Catalysts for market turbulence next year include midterm elections, a new Federal Reserve chair, Supreme Court rulings on tariffs, and potential government shutdowns.
- Defensive sectors like health care, consumer staples, and utilities have historically performed well during midterm election years.
- The market often sees a positive reversal and rally in the fourth quarter of a midterm election year.
- Projections suggest the S&P 500 could finish 2026 between 8% and 12% higher, continuing a streak of positive years.