Since 1950, the S&P 500 has never been down in the 12 months following a mid-term election. The average gain in the ensuring year: 15.3%.
This may be because sitting presidents pull out all the stops to boost the economy as they look to re-election. In one famous episode, President Nixon directed the Defense Department to pre-order two years of restroom supplies in an effort to boost the economy ahead of the 1972 election.
The Trump administration likewise will seek to boost the economy in 2019. One possibility is to forge a deal with Congressional Democrats to boost spending on infrastructure. Beyond that, most of the administration’s economic initiatives are the prerogative of the Executive branch and are largely unaffected by the House changing hands. This includes trade policy as well as efforts to decrease business regulation.
Elsewhere, the pick-up of Senate seats by Republicans makes it unlikely that the 2017 tax cuts will be rescinded (67 Senate votes would be required to override a presidential veto).
One wildcard for investors is the outcome of Special Counsel investigations, which according to several media reports, is nearing completion.