Last Updated on 09/09/2026
History of Financial Markets
I reviewed every U.S. midterm election cycle since 1994 and focused on one simple question: did the stock market record its annual low before the election or afterward?
In seven of the eight cycles, the yearly low occurred before voters went to the polls. In six of those eight years, the bottom formed between mid-June and mid-October—the very period that the “markets won’t be allowed to fall” theory claims is protected. Election month itself delivered gains in six of the eight cycles, while the following eleven months were positive in every case, averaging roughly 13%. The broader statistic often cited is even more striking: the S&P 500 has finished higher twelve months after every midterm election since 1950, a record of 19 wins out of 19.
That history challenges the argument that politicians deliberately support markets ahead of midterms. If that were true, the weeks leading into an election should represent the safer period, with the real downside risk appearing afterward. Instead, history shows almost the opposite. Market lows tend to develop before the election, while the vote often marks the point at which uncertainty begins to clear. The logic is straightforward: political uncertainty is greatest before voters decide, while the policy support that investors expect tends to emerge afterward rather than beforehand. The Fed cut rates the day after the 2002 election and announced QE2 immediately after the 2010 election. In 1998, the Fed delivered three rate cuts, but the market had already bottomed on August 31 before the first reduction.
The supposed political support also fails to appear in market data because the tools available to the White House have limited influence over the forces that dominate during a tightening cycle. Presidents can attempt to influence oil prices through measures such as strategic-reserve releases, as the Biden administration did in 2022, yet stocks still declined into October. President Trump repeatedly criticized the Fed chairman during the second half of 2018, but the central bank still raised rates in December. The White House does not control the two-year Treasury yield, and that yield has become one of the key drivers of market pricing since Jackson Hole.
The Exception: Why 2018 Matters for 2026
The major exception is 2018, and it deserves particular attention because its setup bears the strongest resemblance to the current environment.
In 2018, the Fed was raising interest rates while quantitative tightening was also underway. The S&P 500 reached a record high on September 20, leaving the market relatively close to that peak on election day. Yet the eventual low did not arrive until December 24, when the index was nearly 20% below its October high. The primary catalyst was not the election itself but the Fed’s December 19 rate hike, accompanied by a message that balance-sheet reduction remained on “autopilot.”
The 2022 experience produced a very different result despite also involving an aggressive Fed tightening cycle. Four 75-basis-point rate increases had already taken place, and by October the S&P 500 was roughly 25% below its record. The market bottomed on October 12, about four weeks before the election.
The critical difference was therefore not the midterm calendar. It was whether additional monetary tightening was still ahead of the election or had already been absorbed by markets. In 2022, much of the tightening damage had already been priced in. In 2018, investors were still facing another major policy shock.
The current environment looks more like 2018. Stocks remain near previous highs, the Fed’s next rate decision is only days away, further tightening is being priced into markets, and the two-year Treasury yield has climbed to a 20-month high.
That makes the answer to the “stocks won’t decline before November” argument more nuanced than either side suggests. There is no historical evidence that midterm elections shield equities from declines. There is, however, evidence that when the Fed is still tightening and stocks approach the election near record highs, the major repricing can occur at the next hawkish Fed meeting—which, as in 2018, can take place after the election.
Under that framework, November 3 itself may not be the critical date. The greater risks could come from the September 16 FOMC meeting and the subsequent December meeting.
Two developments could invalidate this 2018 comparison. First, if the S&P 500 establishes its annual low before November 3, 2026 would move back into the historically dominant seven-of-eight pattern. Second, a September 16 Fed pause accompanied by clearly dovish guidance would remove one of the defining features of the 2018 setup. Neither development is currently evident.
What History Says About Gold
The same midterm theory is often extended to gold, based on the assumption that if equities are being supported, other major assets should benefit as well. Historical evidence, however, points to two important conclusions—particularly the second one for the next couple of months.
The first is that during midterm cycles when monetary policy was tightening into the election, gold generally weakened before the vote rather than afterward. In 2014, gold fell roughly 11% from Labor Day to its November 5 low, one day after the election. In 2022, it declined around 6% from Labor Day to September 28 before retesting that level on November 3. In 1994, gold also drifted lower. The only exception was 2018, when gold had already established its low in August.
In other words, the period between Labor Day and the election has historically been a weak stretch for gold during tightening-cycle midterms. The September Fed meeting often falls directly within that window.
The more important question is what happens after the election.
Gold rallied following the vote in 2014, 2018, and 2022, which is the foundation of the popular “buy the midterm” thesis. But only two of those three rallies marked durable bottoms.
In 2018 and 2022, the Fed was approaching the end of its tightening cycle. In 2018, only one additional hike remained in December before the January policy pivot. In 2022, the November 75-basis-point increase was the final major hike before the Fed began slowing its tightening pace. In both cases, the dollar had already reached its peak.
The 2014 setup was completely different. The Fed was only beginning its tightening process. QE3 had ended shortly before the election, the first rate hike was still more than a year away, and the dollar was just beginning a major advance. Gold rallied from around $1,140 to approximately $1,300 by late January, but that rebound ultimately failed. The metal later reached a lower low near $1,046 in December 2015.
That distinction is crucial. Post-midterm gold rallies tended to hold when the Fed was nearing the end of its tightening cycle and the dollar was already near a peak. They failed when the Fed was closer to the beginning of its tightening cycle and the dollar still had room to rise.
The current 2026 setup more closely resembles 2014. The first rate hike is still ahead, while the U.S. Dollar Index has recently broken higher after spending several months near its lows. On those two measures, the current environment looks considerably less like 2018 or 2022.
This also supports the seasonal Labor Day pattern. During the tightening-cycle midterms examined here, gold was either flat or lower after Labor Day. In the setup most similar to the current one, the decline continued through the election, while the subsequent rally became an opportunity for buyers to get trapped.
What It Means for Markets Now
Taken together, the stock and gold records challenge the idea that policymakers will simply prevent markets from falling until the November election.
Historically, the weeks leading into midterm elections have been the weaker period for equities in seven of eight cycles. Gold has also tended to weaken into the election during tightening cycles. And in the one notable case where stocks remained relatively resilient heading into the vote—2018—the larger decline came afterward because the Fed still had tightening ahead.
The historical evidence therefore does not suggest that a market decline necessarily waits until after the election. Instead, the election appears to be more of a calendar marker for when monetary-policy risk becomes important again.
For 2026, three conclusions stand out.
First, for stocks: the 2018 comparison suggests that the main risk lies around Fed policy decisions rather than the November election itself. The upcoming September meeting could matter more than the political calendar.
Second, for precious metals before the election: history is relatively clear. Gold weakened into the vote during every tightening-cycle midterm examined here. With monetary tightening still ahead and the dollar breaking higher, the current configuration resembles the environment in which the decline lasted the longest.
Third, for metals after the election: the key question is not whether the midterm has passed, but whether the Fed is nearing the end of its tightening cycle and whether the dollar has reached its peak. If those conditions are absent, a post-election rally may prove temporary.
The most important signal remains the U.S. Dollar Index. A dollar that peaks as the Fed finishes tightening would resemble the 2022 pattern and could signal a durable bottom in precious metals. A dollar that breaks higher while the Fed is only beginning to tighten would look more like 2014—a period in which the ultimate low in gold was still roughly a year away.
For investors expecting markets to remain protected until November, history offers a different message: the evidence does not show that declines wait for the election.
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