The US midterm elections are expected to create market uncertainty that peaks in August or September, historically the worst period for the S&P 500 in the four-year presidential cycle. Capital Group and LPL Financial note that midterm election years typically see low single-digit percentage gains for the index, with underperformance concentrated in the first three quarters. Investors often rotate into consumer staples and healthcare during pullbacks. After the elections, the removal of policy uncertainty and the likelihood of a divided Congress—seen as reducing policy risk—tend to trigger a risk-on environment, with the S&P 500 historically performing well in the following 12 months. Strategists favor tech, especially multinationals, which have outperformed the S&P 500 by more than 14% on average in the last nine post-midterm cycles, and view any market unwind as a buying opportunity.
LPL Financial Holdings IncLPL Financial is cited as a source noting midterm election year market patterns, which may boost its credibility and advisory business.