The midterm election outcome delivered control of both the House and Senate to Democrats, ending two years of unified Republican government and setting up divided power in Washington come January. Equity markets greeted that result with a notable opening surge.
The S&P 500 ETF, known by its ticker SPY, gapped up 1.15% at the start of trading. According to data going back to the fund’s 1993 launch, that ranks as the second-largest opening gain on the day after a midterm election. The only larger gap came in 1998, when SPY opened 1.27% higher.
A Pattern of Post-Midterm Strength
The opening jump is not an isolated curiosity. Across the eight midterm elections preceding this one, SPY finished higher the following day in seven instances. The size of those next-day gains varied widely, from a modest 0.17% in 1994 to a 2.14% advance in 2018.
That record suggests investors have not treated midterm elections as a reliable signal of near-term equity weakness, even when the results dealt a setback to the sitting president’s party. The current election fit that description: Democrats captured both chambers, a difficult outcome for the Republicans who had held unified control.
Divided Government and Market Expectations
The shift to divided government is the central political fact of the result. With Democrats holding the House and Senate starting in January, the legislative landscape changes from the previous two years, when Republicans controlled both the presidency’s party affiliation in Congress and the legislative agenda.
Yet the immediate market response was positive, with the SPY gap higher standing out against the historical record. The data shared by Bespoke Investment Group, which compiled the post-midterm opening figures, places the 1.15% move in context: only the 1998 open was stronger.
For investors watching the S&P 500 ETF and related broad-market funds, the opening move offers a snapshot of how the market digested the election result. The historical pattern of next-day gains in seven of eight prior midterm cycles provides a reference point, though the range of outcomes—from fractional gains to more than two percentage points—shows that the market’s response has not been uniform.
What the Numbers Show
- SPY opened 1.15% higher the morning after the midterm elections.
- That is the second-largest post-midterm opening gain for SPY since its 1993 inception.
- The largest was 1.27% in 1998.
- SPY rose the next day after seven of the eight previous midterm elections.
- Next-day gains ranged from 0.17% in 1994 to 2.14% in 2018.
The election handed Democrats both chambers of Congress, a result that sets up divided government in January. For market participants, the immediate takeaway was a higher open for the S&P 500 ETF, continuing a historical tendency for stocks to advance the day after midterm voting.