Will There Be a Post-Election Stock Market Pop?
Will there be a post-election pop in the stock market? What history says about stocks in November when there’s a mid-term election. Hello, and thanks for joining us. I’m Scott Inman.
Midterm Election Uncertainty and the Stock Market
You’ve heard us say it so many times. The stock market, or more specifically, investors, do not like uncertainty. There is plenty of that this week with election day a few days away. Control of the U.S. Senate and the U.S. House is up for grabs. Not to mention, 36 governor’s races with 19 open seats. But, once the dust settles on the election, history suggests the market will go up.
What History Says About Stocks in November of Midterm Election Years
According to Morningstar research that studied a century of market performance, stocks have risen in the month of November, in 21 of the past 25 midterm-election years. That’s 84 percent of the time.
Morningstar strategist Dan Lefkovitz concluded that the post-election pop is real. And that’s regardless of the results of the election.
Why This November May Be Different: A Strong Start to the Midterm Year
Of course, every market cycle has different factors to consider. And one of the biggest reasons this November may be different, is that’s it’s already been so good. BlackRock reports that the stock market was up 13.1% through August, the 6th strongest start to midterm year since 1926. That may make it more difficult to expect as much post-election optimism.
Corporate Earnings Growth: The S&P 500 Fundamentals That Drive the Market
At the same time, the market always, eventually, follows fundamentals. And one of the most important fundamentals is corporate earnings. Earnings growth has been enormous in 2026. Third quarter S&P 500 earnings growth is tracking near 30%. This week, 179 of the S&P 500 companies are reporting earnings, so, we will find out if the trend continues.
Earnings Growth Beyond AI and Mega-Tech Companies
LPL Research tells us that one of the positives is that it’s not just the mega-tech companies that are producing the earnings growth. Companies outside of the AI trade are expected to deliver strong profit growth, potentially 20%, while six of the 10 non-technology sectors are projected to generate double-digit earnings gains.
Market Headwinds: AI Borrowing, Energy Costs, and Inflation
That’s not to say that there aren’t significant headwinds. The AI trade is being driven now by borrowed money, not cash reserves, meaning there could be a shorter leash for those companies to show investors results. Corporate profit margins are being squeezed by higher energy costs, and overall inflation.
LPL Research Outlook: Double-Digit S&P 500 Earnings Growth in 2027
LPL’s base case is that the outlook for corporate profits remains encouraging and the Research team still expects double-digit S&P 500 earnings growth in 2027.
Bottom Line: Don’t Let Politics Drive Your Investment Decisions
Bottom line is the bull market seems to still be alive and well, and as investors, we should remember that as we go into to the voter booth. We can be tempted to believe in a political party more than we believe in a resilient economy. And that can make us make a bad investment decision, if, in our mind, the wrong party wins.
Securities are offered through LPL Financial, Member FINRA/SIPC. GenWealth Financial Advisors is an other business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance, LLC, a registered investment adviser. Independent Advisor Alliance, LLC is a separate entity from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
