Morgan Stanley‘s chief stock-market strategist Mike Wilson says the U.S. stock market could benefit from either midterm election outcome, as uncertainty fades and historical patterns point toward stronger returns.
Wilson described the election as a “clearing event,” arguing that the result may matter less than removing political uncertainty, MarketWatch reported Monday.
Since 1982, large-cap stocks gained approximately 15% on a cap-weighted basis and 16% equally weighted during the six months following midterm elections, Wilson said. Those measures increased about 22% over the subsequent year.
Investors already anticipate a narrow Democratic Senate majority, potentially limiting the surprise from the outcome. A larger Democratic victory could shift attention toward 2028 and possible resistance to deregulation, while tariffs, foreign policy and agency-led deregulation remain largely tied to executive authority.
Wilson also pointed to potential consumption support if Democrats delay or reverse Medicaid and food-stamp reductions. Investment and merger activity could accelerate before possible policy changes in 2028, although renewed military escalation with Iran and additional tariffs remain risks.
Wilson said the market correction that began in June is nearing its end, with the S&P 500 pulling back even as market breadth improves. Since late September, falling Treasury yields and improving market breadth have boosted the equal-weighted S&P 500, which outperformed its cap-weighted counterpart by nearly 6%, signaling a broadening rally, he highlighted.
Stocks Have Rallied After Midterms
Historical data adds support to Wilson’s view. Matt Cerminaro, founder of financial-adviser platform Exhibit A said the S&P 500 averaged a 15.5% gain from Election Day through June 30 of the following year since 1950. The historical pattern suggests markets have often advanced after midterms, regardless of which party captured control. “The best midterm strategy is to turn off the TV and set a buy order for Election Day,” he said.
Similarly, Ryan Detrick, chief market strategist at Carson Investment Research, said the S&P 500 rose during every November-April period following the 19 midterm elections since 1950, calling the window “19 for 19.” Detrick noted that November has historically been the strongest month in midterm years, with stocks posting gains 78.9% of the time.
Meanwhile, Fundstrat’s Tom Lee expects the S&P 500 to reach 8,400 by year-end, arguing that excessive investor pessimism is overlooking improving market fundamentals. He sees the upcoming midterm elections as a potential catalyst for technology and cryptocurrency stocks, describing the market as a “coiled spring” poised for gains.
Price Action: Year-to-date, the State Street SPDR S&P 500 ETF Trust (NYSE: SPY) climbed 10.82%, while the Invesco QQQ Trust (NASDAQ: QQQ) rose 12.40%, as per Benzinga Pro.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
