History Shows: This Midterm Election Result Could Be a Warning Sign for the Stock Market
Politics usually doesn't affect the stock market -- unless this one thing happens.
Overview
The midterm elections are happening in November, and investors are wondering whether a big change in government power in Washington, D.C., will have a significant impact on Wall Street. Most of the time, the answer is: probably not. Politics don't tend to have a big impact on long-term stock market returns.
Research from U.S. Bancorp in 2024 showed that most of the time, presidential and midterm elections don't matter much for the stock market. The bank's analysis found that S&P 500 index (SNPINDEX: ^GSPC) returns tend to be more affected by overall economic growth trends and inflation rates than by specific election results.
Details
But history shows that one type of midterm election result can be bad news for stock prices. And it might be about to happen in November.
Source
Originally published at www.fool.com.