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U.S. stock market volatility reaches its peak in mid-term election year, but analysts believe buying opportunities lurk within it

2026-07-26·newswire-us-stock-033210
U.S. stock market volatility reaches its peak in mid-term election year, but analysts believe buying opportunities lurk within it.

The United States will hold midterm elections in November, and this political event usually brings greater volatility to the U.S. stock market, but analysts pointed out that it may also create opportunities for investors.

Jeff Buchbinder, chief equity strategist at LPL Financial, said that judging from historical data, mid-term election years are often the worst years for the stock market's annual performance during the president's four-year term.

The average growth rate of the S&P 500 index is only 4.6%, and the average retracement of stocks is the largest, and the actual volatility is also higher. However, he also pointed out that the U.S. stock market in the 12 months after the midterm elections often shows the highest annual growth rate, bringing strong prospects to investors.

Dating back to 1954, the S&P 500 has risen in each of the past 18 post-midterm election periods, with an average return of 18.2%. Buchbinder emphasized that history shows that investors should probably pay more attention to market behavior rather than political forecasts.

It also reflects a common market trend where uncertainty peaks before an election and begins to recede once the results are known. LPL Financial's basic expectation is that after this year's midterm elections, the U.S.

Congress will be divided, breaking the power structure in which the Republican Party controls both the House of Representatives and the Senate. Buchbinder said a divided Congress could lead investors to expect fewer big legislative changes and more volatility on key issues such as government funding and the debt ceiling.

However, investors will gain a better understanding of the policy environment, returning attention to fundamentals such as economic growth, earnings and monetary policy. He added that while the midterm elections may test investors' patience, self-discipline can also pay off.

Rather than trying to predict the outcome of the election, investors may want to prepare for volatility along the way and be ready to take advantage of opportunities once uncertainty begins to dissipate.

Capital Group’s analysis also pointed out that based on historical data, the first half of the year of mid-term elections is usually volatile and weak, but will gradually stabilize in the second half of the year, and funds will flow back into the market in the second half of the year. However, exceptions may occur in individual years.

Morgan Stanley emphasized in its latest report that historical data shows that mid-term elections have a limited impact on financial markets, and it is more effective to focus on practical policy changes and lasting policy themes. It also predicts that the midterm elections will not lead to a substantial shift in the direction of U.S.

policy, thereby changing the macroeconomic outlook. Policy factors driving the market, such as tariffs, geopolitics and deregulation, are likely to remain in place.

#Stocks #Earnings #Trade #SP500

Full text

U.S. stock market volatility reaches its peak in mid-term election year, but analysts believe buying opportunities lurk within it

[The volatility of U.S. stocks reaches its peak during the mid-term election year, but analysts believe that buying opportunities are hidden in it] The United States will hold mid-term elections in November, and this political event usually brings greater volatility to the U.S. stock market, but analysts point out that this may also create opportunities for investors.

The United States will hold midterm elections in November, and this political event usually brings greater volatility to the U.S. stock market, but analysts pointed out that it may also create opportunities for investors. Jeff Buchbinder, chief equity strategist at LPL Financial, said that judging from historical data, mid-term election years are often the worst years for the stock market's annual performance during the president's four-year term. The average growth rate of the S&P 500 index is only 4.6%, and the average retracement of stocks is the largest, and the actual volatility is also higher. However, he also pointed out that the U.S. stock market in the 12 months after the midterm elections often shows the highest annual growth rate, bringing strong prospects to investors. Dating back to 1954, the S&P 500 has risen in each of the past 18 post-midterm election periods, with an average return of 18.2%. Buchbinder emphasized that history shows that investors should probably pay more attention to market behavior rather than political forecasts. It also reflects a common market trend where uncertainty peaks before an election and begins to recede once the results are known. LPL Financial's basic expectation is that after this year's midterm elections, the U.S. Congress will be divided, breaking the power structure in which the Republican Party controls both the House of Representatives and the Senate. Buchbinder said a divided Congress could lead investors to expect fewer big legislative changes and more volatility on key issues such as government funding and the debt ceiling. However, investors will gain a better understanding of the policy environment, returning attention to fundamentals such as economic growth, earnings and monetary policy. He added that while the midterm elections may test investors' patience, self-discipline can also pay off. Rather than trying to predict the outcome of the election, investors may want to prepare for volatility along the way and be ready to take advantage of opportunities once uncertainty begins to dissipate. Capital Group’s analysis also pointed out that based on historical data, the first half of the year of mid-term elections is usually volatile and weak, but will gradually stabilize in the second half of the year, and funds will flow back into the market in the second half of the year. However, exceptions may occur in individual years. Morgan Stanley emphasized in its latest report that historical data shows that mid-term elections have a limited impact on financial markets, and it is more effective to focus on practical policy changes and lasting policy themes. It also predicts that the midterm elections will not lead to a substantial shift in the direction of U.S. policy, thereby changing the macroeconomic outlook. Policy factors driving the market, such as tariffs, geopolitics and deregulation, are likely to remain in place.

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