S&P 500’s Midterm-Year Fourth Quarter Has a Strong Historical Record

The S&P 500 has gained about 12% this year, with one quarter remaining. Rocky White of Schaeffer’s Investment Research says historical returns suggest the fourth quarter of a midterm election year has often been strong.

Since 1949, the index has averaged a 6.63% gain in the fourth quarter of the second year of the presidential cycle. Returns were positive in 84% of those quarters, according to White’s analysis.

The first three quarters of that cycle year have had weaker records. The first and third quarters each averaged returns of about 0.3%, while the second quarter averaged a decline of almost 2%. Half of second-quarter returns were positive.

Across all years, the S&P 500’s fourth quarter has been its strongest, averaging a 4.25% return, with more than 80% of returns positive. White also found that the first quarter of the cycle’s third year performed even better than the upcoming quarter, averaging a 7.39% gain with positive returns 95% of the time.

The figures cover quarterly index performance since 1949. They describe past returns and do not indicate how the index will perform this quarter.