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CONTRIBUTORS

Chris Galipeau

Head Market Strategist
Franklin Templeton Institute

US midterm elections take place on Tuesday, November 3. Currently, the Republican party is in control of the House and the Senate. This vote will essentially be a referendum on the Republican party’s body of work. It’s likely the composition of either the House or the Senate will change. The question for investors is simple: Does this matter for your money? 

What follows is a historical look at equity market performance under a Republican president and different compositions of Congress. Exhibit 1 illustrates equity market returns under a Republican president with differing congressional control.

Exhibit 1: Midterm Returns and Congressional Control Under a Republican President

The Congressional Outcome Barely Moved 12-Month Returns

Average S&P 500 price return after Republican-president midterms, by resulting congressional control

Small samples: GOP both reflects a single midterm (2002). Forward returns from the election-day close in trading days (12M = 252). Sources: Franklin Templeton Institute, S&P Global, Bloomberg, Macrobond. As of October 5, 2026. There is no assurance that any estimate, forecast or projection will be realized. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Past performance does not predict future returns.

The key takeaway is that one-year forward S&P 500 returns were positive under all combinations of executive branch leadership under a Republican president going back to 1954.

Exhibit 2 digs deeper and shows a breakdown of sector performance.

Exhibit 2: S&P 500 GICS Sector One-Year Forward Performance Following All Midterm Elections

S&P 500 Sector Indices: Average One-Year Forward Returns After Midterm Elections

Note: The period referenced was taken from History, Art & Archives of the United States. Nine periods covered were from 1990 to 2022. *Real estate data were available from 1998 to 2002. Sources: FactSet, S&P Dow Indices. Analysis by Franklin Templeton Institute and Global Research Library. Important data provider notices and terms available at www.franklintempletondatasources.com.

Indexes

Average 1-Year Forward Returns

Maximum

Minimum

Win Rate

S&P 500

14.46%

27.07%

3.71%

100.00%

Energy

4.38%

30.82%

-15.55%

66.67%

Materials

12.08%

33.47%

-4.48%

66.67%

Industrials

13.48%

27.57%

0.34%

100.00%

Consumer Discretionary

17.02%

37.61%

-6.43%

88.89%

Consumer Staples

8.44%

31.35%

-13.15%

77.78%

Health Care

12.47%

45.02%

-3.53%

88.89%

Financials

12.05%

50.65%

-15.39%

66.67%

Information Technology

30.93%

73.74%

4.45%

100.00%

Communication Services

12.88%

46.90%

-8.69%

77.78%

Utilities

7.95%

19.77%

-8.28%

66.67%

Real Estate*

5.58%

17.30%

-8.46%

66.67%

Conclusion

Investors have a tendency to believe that politics heavily influence equity markets. The reality is quite different historically after midterm elections. We can’t state with certainty that history will repeat and we must be cognizant that there are many other factors involved in returns; namely corporate fundamentals, the level and direction of interest rates, regulation, policy changes, etc.

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