US stocks have risen in the six months after midterm elections for more than 70 years, but investors warn the streak could snap after Tuesday’s vote as AI jitters and soaring oil prices darken the outlook. The last decline was in 1946, and historically the index fell about a third of the time in similar windows since 1950.
This year’s outlook is weaker. The S&P 500’s cyclically adjusted P/E ratio stands at 40.7, well above the prior midterm high of 33.8 in October 1998, while the long‑run average is about 20. Gains are concentrated in just five stocks, and Laura Cooper of Nuveen says markets have already run up and face headwinds, including a tech sell‑off over AI return doubts.
Geopolitical risk adds pressure. Oil prices have risen to April levels amid speculation that Donald Trump may intensify the US military campaign against Iran after the vote. Mohit Kumar of Jefferies warns of a “high risk of Trump restarting the bombing campaign,” keeping investors cautious. JPMorgan’s Jordan Jackson notes that markets dislike uncertainty, but clarity may not offset high valuations.
Source: Financial Times Markets · Summarized by HeadlinesBriefing