There was a happy Halloween atmosphere at the New York stock exchange yesterday as the Dow Jones industrial average leapt by 251 points to 25,125.
Facebook shares also surged by 5 percent.
However, the final trading day did not fix last month’s dramatic losses on its own.
According to figures, October was the worst month for stock markets since 2011, and the US midterm elections are playing a key role in the losses.
Sam Stovall, chief of US equity strategy at CFRA, published an analysis which argues finance markets perform significantly worse ahead of midterm elections.
In a report focused on the post World War II midterm elections, Mr Stovall said: “The second and third quarters of the midterm election year traditionally were the most challenging of the entire 16-quarter presidential cycle.
“The reason boils down to one word: uncertainty.”
Historically, the party controlling the White House lost an average of 22 seats in the House of Representatives after the midterm elections and only four in the Senate.
Mr Stovall added: “With this kind of unsettling track record, it should come as no surprise that the S&P 500 posted erratic returns in September of midterm election years.”
At the moment, there is a Republican majority stationed in both the Senate and House of Representative chambers, and Democrats are desperately trying to prevent this majority growing.
A victory for the Democrats over the incumbent Republican majority could make life harder for Donald Trump, who may find it more difficult to pass bills through Congress.
However, if Republicans were able to gain more ground, the process of passing bills through Congress could be expedited for the President.
Trump commented on the poor stock market’s performance on Tuesday, claiming it is “taking a little pause”.
He wrote on Twitter: “The Stock Market is up massively since the election, but is now taking a little pause.
“People want to see what happens with the midterms.
“If you want your stocks to go down, I strongly suggest voting Democrat.
“They like the Venezuela financial model, high taxes and open borders!”
Nancy Pelosi, the Minority Leader of the House of Representatives, said Democrats “will win” and it will be a “great night” for the US.
She said: “If everyone votes we’ll have even a bigger victory.
“Democrats will carry the House.
“If we have a bigger victory, the Senate, governorships…
“It’s going to be a great night for America.”