Midterms Spark Volatility, But History Suggests a Crash Is Unlikely

Midterm elections tend to raise near-term market volatility, but 75 years of data show they rarely trigger a crash. While the year can see larger drawdowns (averaging around 17.5% in midterm years), history also shows that in the six-year mark of a president’s second term the market has often posted solid gains (about 21% on average), and a gridlocked Congress paired with ongoing AI-driven earnings strength could support continued strength rather than a plunge. In short, a midterm-induced crash is unlikely, though volatility may increase.