WrapManager's Wealth Management Blog

When life changes, we can help you thoughtfully respond.

Mid-Term Election Year Volatility

Posted by Doug Hutchinson | CFA®, Director of Research and Trading

October 26, 2018

Historically, equity markets have been very volatile in mid-term election years. Since 1962, the S&P 500 has had an average intra-year pullback of 19% in mid-term election years.1 

In fact, equity market returns have historically been very tepid before Election Day in early November.  In mid-term election years since 1950, the market has returned an average of just 0.96% in the first 10 months of the year, but markets have typically rebounded in the final 2 months of the year, returning an average of 4.24% across November and December. 2

The recent market pullback has wiped out 2018 gains and the S&P 500 is now roughly flat for the year. Again, historically the first 10 months of a mid-term election year are typically flat only to see a relief rally in the final 2 months of the year once the results of the election are known with certainty.

Will history repeat itself in 2018? While it is nearly impossible to forecast stock market returns over a specific time frame (particularly for a brief 2-month window), there are reasons to be optimistic going forward:

Corporate earnings remain strong3:

81% of the 140 companies in the S&P 500 that have reported third quarter earnings (as of October 23, 2018) posted earnings per share that beat Wall Street expectations, with only 10.7% of companies reporting earnings below expectations.  Over the last 25 years, an average of 64% of companies reported earnings that beat Wall Street estimates with 21% of companies missing expectations.4

[+] Read More

Market Volatility stock market performance market perspective Economic Indicators

BlackRock Checks-In on European Risk & The Week in Review

September 27, 2018
A Check-in on European Risk Fears of a fiscal showdown between Italy’s new government and the European Union (EU) have roiled Italian ... [+] Read More

Lord Abbett Shares Reminders on October Deadlines for Retirement Planning

September 20, 2018
If you miss or ignore any of these important, applicable dates, you could hurt your retirement finances. As summer comes to an end, don’t ... [+] Read More

4 Ways the New Tax Law Can Reduce Your 2018 Taxable Income

September 19, 2018
A recent survey from the American Institute of CPAs found that 63% of individuals who either have $250,000 in investable assets and/or ... [+] Read More

Investing When the Market is at an All-Time High

September 18, 2018
Should You Be Concerned About the Height of the Market? US equity markets have been trading at or near all-time highs recently as the S&P ... [+] Read More

How Should You Handle Roth IRA, HSA, and 401k Savings? – Doug’s Quiz Corner

September 14, 2018
Saving for Retirement and Potential Health Care Costs Your friend Jody has recently started a new job and she has several options for ... [+] Read More

Nuveen Sees Economic Growth Picking Up, Believes It Should Help Stock Prices

September 13, 2018
Trade issues may continue to cause trouble but shouldn’t derail the bull market or end the economic expansion. Investor sentiment was mixed ... [+] Read More

Investing Isn’t Always About Retirement Planning

September 5, 2018
When we talk about saving and investing for the future, the conversation usually steers quickly towards retirement planning – IRAs, ... [+] Read More

Should You Invest Your Entire Investment Portfolio in a Single Management Strategy?

September 4, 2018
We’ve all heard the term “don’t put all your eggs in one basket”. Of course, this concept can be easily applied to investing. Many ... [+] Read More

Nuveen Sees Investors Looking Past Risks to Bid Stocks to New Highs

August 30, 2018
We see threats to equities, but we don't believe this bull market is over. Last week featured multiple negative political headlines for ... [+] Read More