#rut

July has historically been one of the market’s stronger months, and the latest data continues to support that view. The accompanying chart compares average July performance during the most recent 21 years (2005–2025) with July performance in midterm election years since 1950.

The solid lines, representing the recent 21-year period, show a remarkably consistent upward trend across all major indexes. NASDAQ has been the standout performer, advancing steadily throughout the month and finishing with an average gain of just over 3%. The S&P 500, DJIA, Russell 1000, and Russell 2000 also exhibit strong positive trends, with gains generally building as July progresses, but slowing shortly after mid-month.

Historically, the market’s strength tends to build from a solid first trading day. While there have been brief pauses and/or pullbacks after mid-month, the overall trajectory remains positive. This pattern likely reflects July’s reputation as a seasonally favorable month, often supported by improving investor sentiment in anticipation of second-quarter earnings reports.

However, the dashed lines on the chart tell a different story for midterm election years. While the DJIA and S&P 500 have still managed modest gains on average, performance has been notably weaker. Small-cap stocks, represented by the Russell 2000, have historically struggled the most during midterm Julys, often finishing the month in negative territory. NASDAQ and Russell 1000 have also experienced greater volatility and less consistent gains.

As the market transitions into the second half of 2026, historical seasonality continues to suggest that July could provide traders and investors with a positive month. July has traditionally been one of the stronger months of the year, even during midterm election years, particularly for large-cap stocks.

Since 1950, July ranks as the third-best month of the year for both the DJIA and S&P 500 in midterm years, posting average gains of 1.6% and 1.3%, respectively. The month has also produced more advances than declines, with DJIA rising in 12 of the last 19 midterm-year Julys and S&P 500 advancing 11 times.

Looking at all years from 1950 through 2025, July’s performance remains consistently positive. DJIA has risen in 67.1% of Julys with an average gain of 1.4%, while the S&P 500 has advanced 60.5% of the time with an average gain of 1.3%. Even NASDAQ, which has historically exhibited more volatility, has gained in 58.2% of Julys and delivered an average return of 0.9%.

Small-cap performance has been more mixed. While the Russell 1000 maintains a respectable July record, the Russell 2000’s average gains have historically lagged, especially during midterm years. This suggests traders and investors may continue to favor larger, more established companies if uncertainty surrounding inflation, interest rates, and economic growth persists.