According to Nick Giorgi, chief equity strategist at Alpine Macro, the S&P 500 posted an average return of just 1.6% during the nine months preceding the last 14 midterm election cycles, compared with 11% this year. This strong run-up could lead investors to trim their equity exposure before the November 3 vote. Giorgi nevertheless expects a dip followed by a buying opportunity, as the S&P 500 has generated an average price return of 13.8% in the nine months following midterm elections since 1970. Prediction market platform Kalshi gives Democrats a 66% chance of winning the Senate majority and a 90% probability of controlling the House; a divided government has also produced an average S&P 500 return of 14%.
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