#midterm year

June’s seasonal market patterns reveal an intriguing divergence between recent market behavior and longer-term historical patterns. The accompanying chart compares average June performance across major U.S. indexes during the last 31 years (1995–2025) against historical midterm-election years (1950–2022), highlighting a notable contrast in market tendencies.

Over the past three decades, June has generally been a constructive month for equities. NASDAQ stands out as the strongest performer, climbing steadily throughout most of the month and finishing with an average gain approaching 1.7%. Russell 2000 and Russell 1000 also show positive trajectories, ending June with gains of roughly 1.2% and 0.4%, respectively. Even the S&P 500 maintains a positive trend, DJIA remains near break-even but largely avoids significant weakness.

A key feature of the recent 31-year pattern appears to be resilience. After a modest pullback around the middle of the month, most indexes recover and strengthen into month-end. This suggests that investors may have historically used June weakness as a buying opportunity rather than a reason to reduce risk exposure.

The picture changes dramatically when examining midterm-election years. Across every major index, June has historically produced negative returns. Small-cap stocks have been particularly vulnerable. Russell 2000’s average performance deteriorates steadily throughout the month, ending around a 2% decline. Russell 1000 and NASDAQ also finish significantly lower, while S&P 500 and DJIA post meaningful losses as well.

This divergence reflects a broader market tendency surrounding U.S. midterm election cycles. Political uncertainty, shifting policy expectations, and heightened economic scrutiny often create a more cautious environment for investors. Historically, this has translated into weaker market performance during Q2 and Q3 of midterm years, with stronger seasonal tendencies often emerging later in Q4.

The stark contrast is difficult to ignore. Recent history suggests June has been a favorable month for stocks, particularly technology and growth-oriented sectors. However, the longer-term record of midterm-election years serves as a reminder that seasonal headwinds can emerge when political uncertainty increases.

As we noted in our earlier June seasonal outlook, midterm election years tend to produce a choppy and often challenging June. While market momentum coming into the month was encouraging, traders and investors also faced a historically weak seasonal backdrop. Through the first half of June, the market has largely followed the weaker midterm pattern.

The accompanying updated chart compares the average performance of major indexes during June in midterm years since 1950 with the actual path of 2026 as of today’s close (June 17). After a modest early-month advance, selling pressure emerged around the fifth trading day and intensified into the second week of the month. NASDAQ experienced the sharpest pullback, underperforming its historical midterm-year trend by the greatest margin, while the S&P 500 and Russell indexes also weakened in line with seasonal expectations.

What is particularly interesting is the rebound that developed around trading days 9 through 12. Historically, midterm-year Junes often experience a brief recovery during this period before weakness reasserts itself later in the month. Thus far, 2026 has tracked that tendency remarkably well. DJIA has even managed to outperform its historical midterm pattern, while the Russell 2000 has shown notable resilience compared to its long-term seasonal norm.

As a part of the Best Six/Eight Months for stocks, March has historically been a satisfactory performing month with DJIA, S&P 500, NASDAQ, Russell 1000 & 2000, advancing more than 63% of the time with average gains ranging from 0.6% by Russell 2000 to 1.0% by S&P 500.

March has historically improved in midterm-election years. In midterm years March ranks: 4th best for DJIA and S&P 500 and 3rd best for NASDAQ, Russell 1000, and Russell 2000. DJIA, S&P 500, Russell 1000 and 2000 have been positive in six of the last seven midterm Marchs. NASDAQ has been slightly softer, with gains in five of the last seven.

Despite declining in three of the last four years, April is still the second-best month for DJIA and S&P 500 (since 1950) and fourth best for NASDAQ (since 1971). April 1999 was the first month ever to gain 1000 DJIA points. However, from 2000 to 2005, “tax” month was hit, declining in four of six years. From 2006 through 2021, April was up sixteen years in a row with an average gain of 2.9% to reclaim its position as the best DJIA month since 1950. DJIA’s streak of April gains ended in 2022’s bear market declining -4.9% that year, -5.0% in 2024, and -3.2% in 2025.

However, typical midterm-election year’s woes have tempered April’s performance since 1950. April is DJIA’s and S&P 500’s seventh best month in midterm-election years, up 12 of the last 19. Russell 2000 ranks highest at fifth best in midterm-year Aprils. Sizable losses exceeding 4% on DJIA and S&P 500 occurred in 1962, 1970, 2002, and 2022. The longer the war with Iran persists, the higher the odds that April 2026 could also succumb to mid-term year weakness.

February’s first trading day has been bullish for DJIA, S&P 500, NASDAQ, Russell 1000 and 2000. Average gains on the first day over the most recent 21-year period (solid lines in above chart) range from 0.39% by DJIA to 0.78% by Russell 2000. However, after a strong opening day, positive momentum has tended to stall out until around the seventh or eighth trading days. From there until around the 12-trading day all five indexes have historically enjoyed gains. But those gains have not held with the indexes beginning to decline after Presidents’ Day through the end of February.

February is in the middle of the Best Six Months, but its long-term track record, since 1950, is not all that impressive. February ranks no better than sixth and has recorded meager average performance except for Russell 2000. Small cap stocks, benefiting from “January Effect” carry over in some years; historically tend to outpace large cap stocks in February. The Russell 2000 index of small cap stocks turns in an average gain of 1.0% in February since 1979, the sixth best month for that benchmark.

Despite some profit taking the past couple of trading sessions, Russell 2000 is still having a banner January this year handily outpacing the other major indexes and appears to be benefiting from a strong “January Effect.” Should this momentum resume, Russell 2000 could continue to exhibit strength into and even throughout this February.

In midterm years, February’s performance improves with average returns generally increasing. Here again it is the Russell 2000 small-cap index that shines brightly, gaining 1.3% on average since 1982. DJIA and Russell 1000 tie for second best, averaging gains of 0.5% each, but DJIA enjoys the greatest frequency of gains. NASDAQ averages a gain of 0.4% (since 1974) while S&P 500 lags with average advance of 0.3% (since 1950).

On the heels of one of the roughest first half starts in decades; the market had found some footing during the seasonally bullish start to the second half of the year here in the beginning of July. Even during historically meager midterm years, the first half of July has generated respectable gains. However much like the first half of the year, typical first half of July strength appears to have come to an end. After briefly entering positive territory, NASDAQ’s midyear rally is now a bust down 2.3% at today’s close with only two days remaining in the 12-day span.