Democrats gained control of the House and the Republicans maintained control of the Senate in the 2018 midterms, a situation that many are concerned will lead to political gridlock. However, if you look at history, it is the best case scenario for markets.
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According to Dow Jones Market Data, analyzing markets and election data going back to 1970, this scenario is the best case for U.S. stocks, with the broad-based S&P 500 index up 19.9 percent, on average one year later.
Shorter term, markets also perform well, up about one percent one month later, about 4 percent one year later and 17.91 percent six months later. On average, the S&P 500 is up 17.9 percent.
The possibility for history to repeat itself, and markets to post gains in the coming months, follows a volatile October.
As previously reported by FOX Business, for the Dow Jones Industrial Average, October 2018 is among the most volatile months in 118 years, based on daily percentage swings since 1900. For the S&P 500, the broadest measure of stocks, volatility was the highest in 90 years or since the modern day index rolled out in 1928, according to the Dow Jones Market Data Group.