BREAKING: US households now own ~42% of the US equity market, their highest proportion since the late 1990s. This proportion has risen +7 percentage points since 2020. Foreign investors are the 2nd-largest owners, accounting for 18%, up from 16% in 2020. Mutual funds rank 3rd, at 15%, down from 23% in 2020. Meanwhile, ETF ownership has increased +3 percentage points over the last 6 years, to 10%, its highest on record. By comparison, pension and retirement funds own 8% of the market, while hedge funds own just 1%. Household demand for stocks is stronger than ever.

US stocks tend to rally following Midterm elections: The S&P 500 has returned +17.2% on average in the year following Midterm elections since 1950, the strongest return of any year in the Presidential cycle. The index has finished higher in 17 of the 19 post-Midterm years during this period. This is also nearly quadruple the +4.6% average return recorded during midterm years, when the index finished higher in 11 of 19 years. By comparison, the S&P 500 has returned +8.1% on average in Year 4 of the Presidential cycle, or during Presidential election years, ending higher in 16 of 19 years. In Q4 of Midterm years, the S&P 500 has delivered an average return of +6.6% since 1950, the strongest quarterly return of the Presidential cycle. History suggests US equities will extend their rally after Midterm elections.