National Bank Financial - Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF. NBF is a member of the Canadian Investment Regulatory Organization (CIRO) and the Canadian Investor Protection Fund (CIPF), and is a wholly owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA). The information contained herein has been prepared by Eric Van Enk, Portfolio Manager and Wealth Advisor at NBF. I have prepared this article to the best of my judgment and professional experience to give you my thoughts on various financial aspects and considerations. The opinions expressed represent solely my informed opinions and may not reflect the views of NBF. The particulars contained herein were obtained from sources we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed do not necessarily reflect those of NBF.
Market Performance in Mid-Term Election Years
February 21, 2026, Insight from Eric Van Enk, Wealth Advisor & Associate Portfolio Manager
Market performance during mid-term election years | Kunz Financial Group
It’s been an interesting start to 2026 for financial markets with considerable volatility and widespread uncertainty regarding market direction. A lot of this uncertainty is a result of geopolitical events including Ukraine, Iran, Venezuela, etc. We’ve also seen President Trump continue his tariff rhetoric which adds to market uncertainty. Fortunately for markets, fourth quarter earnings season has generally been positive with earnings growth coming in ahead of market expectations. This week’s chart provides insight into what we might expect for the balance of 2026 given it is a midterm election year in the U.S.
Source: National Bank Financial
The chart shows the average annual performance for the S&P 500 index over the past ~45 years (1980 – 2026). Midterm election years are depicted in dark blue while all other years are shown in grey. Thus far, 2026 (red line) is tracking closer to the ‘all other’ average vs. the midterm average, yet, the year is young. Notice the average performance of the S&P 500 for U.S. midterm election years is substantially lower than non-midterm election years (~4% return vs. ~13%). Also notice the typical seasonality of midterm election years with the average annual positive performance of ~4% being earned post-election day in November. This traditional ‘Santa Clause’ rally occurs once the market receives certainty from the election. This appears to be logical as markets dislike uncertainty.
Will 2026 be different? Time will tell, however, there are a few factors which I consider to be positive at time of writing. First, earnings growth for companies which comprise the S&P 500 have been strong and are accelerating. Reasons for this include productivity growth driven by advances in artificial intelligence, declining interest rates as well as a U.S. administration which is supporting the economy by reducing taxes and promoting pro-growth policies. Second, advanced polling for the U.S. midterm election in November is currently predicting the most likely outcome being a split between control of the House and Senate, followed by Democrats taking control of both the House and the Senate due to the declining popularity of President Trump and his policies. Markets generally respond well to a balance of power between the Executive branch (President), House of Representatives and Senate. If polls remain relatively consistent heading into November, the market may not have significant midterm uncertainty to overcome. However, if polls move back into President Trump’s favour, this could lead to market uncertainty and volatility.
Eric Van Enk, Wealth Advisor & Associate Portfolio Manager
National Bank Financial – Wealth Management
Medicine Hat, AB
