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Are Stocks Going to Plunge if Congress Is Split Under President Donald Trump? Here's What History Says About Stock Market Returns in This Scenario.
Yahoo Finance • • business
Key Points:
- Since the late 1890s, about 75% of presidential terms have seen stock market gains, with President Trump's tenure showing higher annualized returns in major indices compared to most predecessors.
- The November 3 midterm elections could disrupt Trump's unified government, which historically tends to lose seats in midterms, potentially impacting fiscal policy and stock market performance.
- Prediction markets suggest a divided Congress is likely, with Democrats possibly gaining control of one or both houses, which would hinder major legislative actions and complicate debt-ceiling negotiations.
- Historical data shows that under Republican presidents, unified government yields higher average annual S&P 500 returns (14.52%) compared to divided government (7.33%), indicating more modest stock gains if Congress splits.
- Despite political shifts, long-term stock market returns remain positive regardless of party control, with 20-year rolling returns of the S&P 500 consistently positive since 1900, emphasizing the importance of long-term investment over reacting to election outcomes.
