Which Sectors Do Best After a Midterm Election? 100 Years of Returns, Ranked
Everyone quotes the same midterm statistic — stocks rise in the year after the vote. But which part of the market actually does the rising?
Technology — by a wide margin, in both the 100-year record and the modern ETF era. The average post-midterm year gave tech about +30%, while energy managed about +4%.
That gap is the story. The index-level pattern is well known: the S&P 500 has risen in the 12 months after every midterm since 1942, averaging about +15%, according to Franklin Templeton's analysis of S&P Global data. What gets quoted far less is the spread inside the market — the average gap between the best and worst sector in the same window is roughly 40 percentage points. This post ranks the sectors on two independent datasets, explains why the leadership looks the way it does, and ends with what the numbers can and cannot tell you about the year ahead. All figures are as of early November 2026, days after the November 3 vote.
The modern scoreboard: nine midterms, 1990–2022
Information technology averaged +30.3% in the 252 trading days after each midterm — more than double the S&P 500's +14.0%.
Franklin Templeton Institute's table tracks sector price returns over the 252 trading days following each midterm election from 1990 through 2022 — nine elections in all. Every sector averaged a gain, even energy at the bottom. But the spread from tech at the top to energy at the bottom is 26 points, and the index itself sits third in the ranking.
Two details matter more than the ranking itself. First, the average is the story, not a streak: tech led outright in only four of the nine years (1994, 1998, 2002, 2018). The +30.3% average is pulled up by two enormous years — +73.7% after 1998 and +51.5% after 1994. In 1990 tech gained just +14.3% and trailed the index; in 2010 it gained only +3.3%. Second, the bottom of the table is where the pattern is most consistent: energy was the single worst sector after the 2014 and 2018 midterms, and communication services took the top spot in 2022 (+46.5%), ahead of tech's +43.5%.
The 100-year check: technology wins 18 of 25
Across 25 midterms back to 1926, technology beat the broad market 18 times — and has not lost once since 1978.
That is the result of a second, independent dataset: an analysis of the Kenneth R. French Data Library's 12 industry portfolios, compounding the twelve months from November of each midterm year through the following October, with dividends included. Technology averaged +28.7% in those windows, was positive in 92% of them, and beat the market by 9.6 points a year on average. The whole market averaged +19.2% and was positive in 24 of the 25 windows — the single exception was 1930, at −36.1%, in the depths of the Depression.
- Retail & wholesale: +21.9% average, beat the market in 15 of 25 midterms.
- Consumer durables: +23.3% average, beat the market in 14 of 25.
- Energy: +14.8% average, beat the market in only 8 of 25 — the second-worst hit rate in the table.
- Telecoms: +14.6% average, beat the market in only 7 of 25 — the worst hit rate of all.
The pattern survives the switch from academic portfolios to funds you can actually buy. In the ETF era — the five midterms from 2006 to 2022, measured with the SPDR Select Sector ETFs — the technology fund (XLK) averaged +18.9% and beat the S&P 500 after all five elections, while the financials fund (XLF) averaged −2.7% and beat the index zero times. Ameriprise's own six-cycle study (2002–2022) reaches the same ranking: information technology led post-election gains, followed by consumer discretionary and communication services, while defensives and financials trailed.
The financials paradox: best in Q4, worst over the year
Banks are the strongest Q4 trade of midterm years — and the weakest 12-month one. The window you pick decides the winner.
Our gridlock briefing yesterday showed the short window: in the fourth quarter of midterm years, the median sector gains since 1930 put health care first (+10.3%), financials second (+9.2%) and technology third (+9.1%), per Fundstrat data. Stretch the window to 12 months and financials fall to +11.5% in the Franklin Templeton table — below the index — and to −2.7% a year in the ETF era, losing to the S&P 500 after all five modern midterms.
The honest reading is that financials' edge is concentrated in the weeks right after the vote — the relief-rally window, when uncertainty burns off and rate and deregulation hopes run ahead of earnings. As the year wears on, the post-midterm year stops being about the election and starts being about the rate cycle and earnings — ground where banks have no special edge. The Q4 number and the 12-month number are both true; they describe different trades.
Why the pattern might exist — and why it might not
Three explanations fit the data, and none of them is proven — which is itself the point.
1. The policy vacuum
A midterm that splits Congress, or splits Congress from the White House, effectively ends major legislation until the next presidential cycle. Sectors whose earnings depend on the tax code, on subsidies, on rate regulation or on appropriations — utilities, energy, telecoms, defense — lose the option value of favorable laws. Sectors whose earnings depend on the product cycle simply carry on. That matches the bottom of the table.
2. Duration
The post-midterm year has often coincided with policy uncertainty falling and monetary tightening stopping. Long-duration equities — which is what technology is — gain the most when the discount rate stops rising. That ties the sector result to the rate cycle rather than to the ballot.
3. Tech's own trend
Technology has outperformed over most rolling periods since 1926, not only after midterms. Part of the 18-of-25 record may simply be tech's long-run trend showing up in a window labeled "post-midterm." The fairer reading: the midterm window did not interrupt tech's trend, while it did interrupt the trends of the policy-sensitive sectors.
One more caveat: every one of the five modern midterms produced divided government, so the ETF sample cannot separate "post-midterm" from "divided government." The longer sample contains both outcomes, but not in numbers large enough to test the difference reliably.
The base rate: stocks rise in most 12-month periods anyway
Any random 12-month period since 1871 averaged +11%. The post-midterm average is +14% — better, but not a different universe.
A Motley Fool analysis of Robert Shiller's dataset finds the S&P 500 averaged a 14% total return in the 12 months after midterm elections since 1874, finishing higher 84% of the time — against an 11% average for any 12-month period in the market's history. J.P. Morgan Asset Management's count is 19 of 19 positive since 1950, at about 15% on average. Ameriprise's longer cut puts the year after a midterm at +20.5% on average since 1990.
U.S. Bank's statistical test could not establish a dependable causal "midterm effect" — 19 or 20 observations is a small sample, and inflation, interest rates and the economy tend to dominate. The sector version of the same warning: the average gap between the best and worst sector in the same post-midterm window is about 38.5 points at the median (44.6 on average). Getting the index call right and the sector call wrong has historically been a much worse outcome than the reverse.
What to do with this: three checks before the year turns
Treat the pattern as context for a portfolio review, not as a trade — and check the 2026 starting point first.
1. Check the starting point
Technology entered this window already up about 30% on the year, and energy about 43% (year to date through early September 2026). The pattern was built mostly on windows where tech started from a less demanding base. Buying the leader after a 30% run is a different decision than the historical average describes.
2. Check your own weights
If your portfolio is already tech-heavy — and the index itself is, with the largest stocks carrying the heaviest weight in history — the "tech wins" pattern may already be your portfolio. The question is not whether to buy tech; it is whether you are comfortable with how much you already own.
3. Check the calendar, not the pattern
The 12-month average says nothing about the next three months. Franklin Templeton's data shows +7.0% on average at three months — but the range includes windows that contained the 1987 crash. If you need the money within a year, the pattern is not a reason to take more risk.
Key Takeaway
Technology leads the post-midterm year in every dataset we checked — a +30% average since 1990, 18 wins out of 25 since 1926. Financials and energy lag over 12 months even though banks lead the Q4 relief rally. And the honest frame: the average hides a roughly 40-point spread between sectors, a small sample, and a base rate in which stocks usually rise anyway.
The midterm pattern is a map of where leadership has usually shown up — not a ticket to chase it.
Sources
- Franklin Templeton Institute — "Midterm Pattern: A Bullish Roadmap" (S&P Global, Bloomberg, Macrobond; as of October 5, 2026) — franklintempletonprod.widen.net
- SimianX — "Best Sectors After Midterm Elections: 100 Years of Data" (Kenneth R. French Data Library; SPDR Select Sector ETFs) — simianx.ai
- Ameriprise Financial — "What the 2026 midterm elections could mean for markets" (Bloomberg data; midterm years 2002–2022) — ameripriseadvisors.com
- Endowus — "US midterm elections: what they mean for markets" (J.P. Morgan Asset Management; BlackRock) — endowus.com
- Motley Fool — "The midterms are coming. Here's what the stock market has actually done before and after since 1874" (Robert Shiller's dataset) — kioncentralcoast.com
- Market Issue — "Do Bank and Tech Stocks Do Better Under Gridlock? Sector Returns Compared" — marketissue.blogspot.com
- Market Issue — "2026 Midterm Results: What Democrats Winning Congress Actually Changes for Investors" — marketissue.blogspot.com
This briefing is informational only, not investment advice.
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