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S&P 500 and US mid-term years

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Question asked 24/04/2026

S&P 500 and US mid-term years

In Tuesday's morning report the statement around "Sell in May, and Go Away" was said to be wrong with positive returns in May, June, July & August on average over the last decade. Wobbles only being seen in September & October. With the history on mid term years and markets grinding higher in the US, reading into MM's thoughts I am assuming that the suggestion of a mid term outlier year maybe on the cards? With MM thoughts around the market being higher at the end of the year, is the potential for a bounce in the S&P500 post election being considered? Appreciate some further explanation. Enjoy the commentary and it gives me other angles to explore and investigate before investing. Regards, David.

Answer

Hi David,

Sorry, we may have confused people here, to clarify our thoughts:

We are bullish the S&P 500 through 2026 and are not expecting an outlier year.
Hence, we are advocates of buying dips, as long as earnings continue to impress.

We’ve shown the S&P 500’s performance over the last decade in the table below. If we consider a longer duration, and only look at years which include US midterms the results are very interesting:

Midterm years tend to deliver volatility and below-average returns during the year itself, particularly in the first half, driven by political uncertainty and policy anxiety. Then once the election result is known, uncertainty clears, and the market historically delivers some of its strongest 12-month returns of the entire four-year cycle.

For 2026, we’ve already had our fair share of volatility events. The Iran conflict correction in March drove a meaningful drawdown before recovering. If the historical pattern holds, the November midterms removing political uncertainty could be the next significant catalyst for the second leg of the rally.

The data agrees with MM, buy dips when they occur, importantly the post-midterm window has been one of the most bullish reliable setups in market history.

chart

S&P 500 Index 10-Year Seasonality – Source Bloomberg

LAST UPDATED 24/04/2026 10:12

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