This week’s Chart of the Week is from Morningstar’s Markets Observer Q2 2025 report. The comprehensive research covers how markets have fared, and where valuations and opportunities currently sit.

The below chart shows the distribution of daily price returns (that is, excluding dividends) for the S&P 500 over four-year US presidential cycles dating back to 1928.

While there is considerable variance around the mean, the index generally experiences positive returns throughout the cycles. That said, returns have slumped below the 25th percentile in the early stages of the current cycle, driven by President Donald Trump’s on-again, off-again tariff plans.

Market outcomes over election cycles

Uncertainty is the word of the day. My colleague Mark LaMonica recently wrote about how the market volatility is making him nervous and how investors should harness this energy.

Importantly, it is prudent to acknowledge how the market might be making you feel, but critical for successful investors to stick to a plan.

Morningstar’s Market Strategist Lochlan Halloway also recognised that the short-term macroeconomic backdrop can be very important for certain industries, but long-term fundamentals are almost always more important drivers of our Fair Value estimates. You’re able to read about how we factor tariff uncertainty into equity valuations here.

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You’re able to find more of the Chart of the Week series here.