Volatility is heating up in October, with some big drops for stocks late last week. Now let’s put things in perspective. The S&P 500 Index just had its least volatile third quarter since 1963, and it hasn’t closed up or down more than 1% for more than three months in a row—one of the longest streaks ever. Not to mention the S&P 500 has been up six months in a row, and some type of volatility or correction is perfectly typical. It might feel bad when it happens, but pullbacks are a normal part of bull markets.
“Some pre-midterm volatility could be in the cards, but the good news is that looking at the past 18 midterms (back to 1946), the S&P 500 was higher a year later every single time,” said Senior Market Strategist Ryan Detrick. This helps put in perspective just how much of a tailwind the calendar could be for investors here.
As our LPL Chart of the Day shows, the S&P 500 has been up 14.5% on average a year after all midterm elections going back to 1946. In addition, all 18 midterms saw higher returns 12 months later.
For more on our thoughts about the upcoming midterms, be sure to read this recent Weekly Market Commentary.
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