LIVE MARKETS-Midterm years historically bad for equities

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MIDTERM YEARS HISTORICALLY BAD FOR EQUITIES

History suggests that 2026 might not be the greatest year for U.S. equities.

A review of midterm election years since 1945 reveals that equity market gains were typically lower than in non-election years, says Wolf von Rotberg, equity strategist at J. Safra Sarasin Sustainable Asset Management.

While U.S. equities have risen by an average of 9% per annum since 1945, the average price gain in midterm years drops to 4%.

"This discrepancy has been particularly pronounced under Democrat presidents, but the trend holds true under Republican administrations as well," he says.

The market’s strong trajectory over the past three years also warrants further caution regarding 2026.

If the market holds its value through year-end, it will be the sixth time since 1945 that the index has risen by more than 75% over a three-year period.

In four of those six cases, the market declined the following year. The only exceptions, where the market extended that 75% gain, were 1998 and 1999, during the late stage of the dot-com bubble.

"It will be difficult to argue for another year of strong double-digit returns absent a dot-com-style ramp-up, which we view as unlikely", von Rotberg adds.

(Joice Alves)

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