Post-Midterm History and Earnings Support Wall Street Outlook

Historical returns and corporate earnings expectations are helping support the outlook for U.S. stocks ahead of the November midterm elections. Truist chief strategist Keith Lerner said the S&P 500 has posted positive returns in every one-year period after midterms since 1946.

The index gained an average of 14.4% in those periods, according to Lerner. Since 1950, it has also risen an average of 6.6% in the fourth quarter of midterm years, finishing higher 84% of the time.

Earnings estimates are another source of support. S&P 500 earnings are expected to grow 24.6% year over year in the third quarter, which would be the index’s eighth straight quarter of double-digit growth. Estimates call for 27% growth in the fourth quarter of 2026.

Election results could still affect markets. Morgan Stanley strategists said the market response may depend on the type of political control that emerges, and a stronger-than-expected Democratic showing could prompt a near-term pullback.

Bain & Company expects U.S. holiday retail sales to exceed $1 trillion, up 4.5% from a year earlier. Elevated bond yields, energy prices and the election outcome remain risks, according to the article.