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Markets usually rebound after a September plunge, but stocks lead a more substantial rally in midterm-election years, according to the Bank of America. 

In a Friday research note, BofA analysts said that the month of October is positive 59.6% of the time, with average returns of 0.50%. The rest of the year is even better as November returns 0.83% and December yields 1.36%.

Bank of America

BofA said that seasonality strengthens during midterm election years, with October in the green 65.2% of the time and returns 2.16% on average.

Midterm Novembers also outperform with a return of 2.03%, while Decembers return 1.19%, trailing the overall average Santa Clause rally of 1.36%. 

Bank of America

Furthermore, the strategists wrote that stock market gains continue into the following year's first half. 

"The SPX is up 91% of the time (21 out of the last 23 cycles) with an average return of 16.64% (17.74% median) from the start of 4Q in the midterm year through the end of 1H Year 3 of the Presidential Cycle," BofA said. "16 out of 23 cycles saw double-digit positive returns over this period. The last two cycles had below average positive returns, but the last time this period had a negative return was from 4Q 1938 through 1H 1939."

Nonetheless, the note didn't bring up other factors related to the 2022 midterm election year, especially the Federal Reserve's aggressive monetary tightening meant to tame inflation at 40-year highs.

Additionally, this cycle's improving electoral prospects for Democrats weren't included. Investors often prefer a divided government over one party controlling the White House and Congress.