Historical market data shows a divided congressional government produces the highest average returns for the S&P 500. At the same time, a Republican president paired with a Democratic Congress results in the lowest historical market gains.
The ‘Worst Possible Combination’
When factoring in the political affiliation of the sitting president, the dynamic shifts significantly. According to Ryan Detrick‘s historical data, “The worst possible combination is a Republican President and a Democratic Congress.”
This specific political makeup—a scenario that would apply to Donald Trump assuming the presidency alongside a Democratic-majority Congress—historically yields an average annual S&P 500 return of just 4.9%.
Detrick observed that markets were actively pricing in this data, adding, “Futures seem to agree so far.” Responding to a question about whether this 4.9% figure was primarily driven by the Global Financial Crisis, Detrick stated, “It is the most likely scenario at 22 times. So it is somewhat, but some other bad years in there for sure.”
The ‘Best Scenario’ for Stocks
A split Congress yields an average S&P 500 annual return of 15.1%, based on historical data spanning 1951 to 2025. Sharing the data on X, Detrick, stated, “Good reminder that the best scenario for stocks is a split Congress.”
When looking strictly at congressional makeup without factoring in the executive branch, Detrick noted that “A Democrat controlled Congress is the worst scenario historically,” as that setup averages a 6.7% return compared to 11.3% for a Republican-controlled Congress.
Historical Market Context
The data, sourced from Carson Investment Research and FactSet, tracks market performance starting with the 82nd Congress. Under a Republican president with a Republican Congress, the index averages a 7.6% return, while a Republican president with a split Congress averages 13.7%.
Conversely, a Democratic president paired with a split Congress yields the highest specific combination return at 17.0%, while a Democratic president with a Republican Congress averages 16.3%. A Democratic president paired with a Democratic Congress averages an 8.6% return.
How Has the Stock Market Performed?
The S&P 500 index has advanced 10.36% year-to-date. Similarly, the Nasdaq Composite index was up 9.19%, and the Dow Jones gained 7.04% YTD.
On Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed mixed. SPY rose 0.30% to $754.35, while QQQ advanced 0.62% to $685.28. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), ended 0.44% lower at $517.06.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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