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Thursday
Oct282010

Historical Midterm Election Results and Market Performance

For those interested, below we have compiled a table showing midterm election results along with the Dow's performance on election day and during election week since 1900.  For each midterm election, we highlight the President and his party affiliation, the number of seats the President's party either gained or lost in both the House and Senate, and the number of seats each party held as a result of the election.

It has been noted countless times that the President's party usually loses seats in Congress during midterm elections, but the numbers below show just how true this is.  Since 1900, the President's party has lost an average of 29 House seats and 3.4 Senate seats.  The average makeup of the House following midterm elections since 1900 has been 234 Democrats and 194 Republicans.  The average makeup of the Senate has been 52 Democrats and 45 Republicans.

The market has historically done well on election day (the Tuesday after the first Monday of November) and during election week.  Since 1900, the Dow has averaged a gain of 0.28% on election day versus the average change of 0.03% for all trading days since 1900.  We used the following day's change prior to 1970 since the market was closed on election day.  If we only go back to 1970, the average change for the Dow on election day has been 0.53%.  Looking at the entire week surrounding election day, the average change has been very positive as well at 0.90% with positive returns 17 out of 26 times.  (Note: The market was closed during election week of 1914 due to World War I.)

Reader Comments (1)

An interesting one - looks like you need to be long for election day!

A more interesting one that I am sure you will enjoy confirming is as folllows:

Given:
-A first term president
-A mid term election year
-A January down 1% or more

4 out of the 5 years closed DOWN for the year! 1970 was the only up year. The other years were 1962, 1978, 1990, 2002.

Given all of the expectations for higher prices, it would really mess with people to see the market close down for the year!

THANKS!

October 28, 2010 | Unregistered CommenterDenali92

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