How the stock market has performed after Veterans Day over the past decade

By Joy Wiltermuth

The stock market is open Wednesday on Veterans Day, but not the bond market

Military officials at the Tomb of the Unknown Soldier at Arlington National Cemetery on Veterans Day 2025.

The stock market will be open on Wednesday for Veterans Day, but the bond market will be closed.

That should provide Wall Street a bit of breathing room after Tuesday's surge in bond yields sent America's benchmark 10-year Treasury yield BX:TMUBMUSD10Y back up to the 5% threshold - and tech stocks tumbling once again.

The latest yield surge comes on the heels of another hot inflation print, which spooked the market. The main worry is the Federal Reserve may need to get more aggressive in raising interest rates to cool inflation, which has been stuck above its 2% annual target.

October's inflation data reflects higher fuel costs from the Iran war, which have eased in November on increased crude supplies. Global Brent crude prices (BRN00) were around $91 a barrel on Tuesday, down from an October high of about $114, according to FactSet.

The hope on Wall Street is that President Donald Trump might be encouraged to end the war after Republicans lost the House, Senate and many state races to Democrats. An end to the conflict could give the Fed more room to wait before increasing rates.

The S&P 500 SPX has been volatile in the wake of the midterms. Yet it's still up more than 10% on the year, on pace to snap a trend of annual losses for the 2018 and 2022 midterm years, as the below chart shows.

S&P 500's annual performance in midterm election years since 1998.

If the current gains hold, the S&P 500 will eclipse its compounded annualized return since 1950 of 8.2%, according to Dow Jones Market Data.

Big gains in stocks over the past four years have kept wealthier households spending, while inflation pressures and higher rates have hurt lower-income families.

There's now growing concern that the Fed might need to get more aggressive about hiking interest rates to coax inflation back down to its target, which could hurt stocks.

That could put the Fed and markets at odds heading into year's end. Stocks tend to be weak in the runup to midterm elections, largely because of uncertainty around potential policy changes. But the rest of the year often sees strength once the results are known, as MarketWatch's Mark Hulbert has reported. That can pave the way for the typical year-end rally to take hold.

The stretch between Veterans Day and the end of December has been a mixed bag for the S&P 500 over the past decade, as the below chart shows.

S&P 500's performance from Veterans Day to year's end.

While the median gain was 2.51% since 2015, the S&P 500 logged a big 8% increase in 2023 during this period, and an 8% loss in 2018, according to Dow Jones Market Data.

This year, the stock market has faced extreme volatility since the midterms, with the fate of the U.S. data-center buildout now under intense scrutiny.

Higher yields as of Tuesday come in stark contrast to the easing seen in recent weeks. Rising borrowing costs will make it more expensive for the "hyperscalers" to finance their infrastructure projects, which increasingly rely on debt.

Will Compernolle, a macro strategist at FHN Financial, said that until Tuesday, Treasurys had been overbought by traders who "overextended the bond-bullish implications" of the recent patient tone from Fed officials. They are now priced closer to "fair value," he said in a client note.

Higher 10-year Treasury yields can decrease the value of future corporate profits, while pushing up borrowing costs for households, businesses and the U.S. government.

Rates on new 30-year mortgages, for example, now sit around 7.12%, keeping the U.S. housing market on ice.

Pimco economist Tiffany Wilding said that a half-point hike is "now on the table for discussion" at the Fed's December meeting. Yet if the Fed only hikes by 25 basis points, "the risk of stickier near-term inflation argues for hiking at both the December and January meetings with the risk of another in March," she said, in emailed comments.

Ken Jimenez, Abhirami Shrinivas and Terrence Horan contributed

-Joy Wiltermuth

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11-10-26 1629ET