Why History Isn't on the Side of the S&P 500 Heading Into These Next 10 Months of 2026

After immoderate shaky months successful the earlier portion of the year, the S&P 500 (SNPINDEX: ^GSPC) -- which tracks astir 500 of the largest American companies connected the marketplace -- finished the twelvemonth strong, up 16%. This marked the 3rd consecutive twelvemonth the scale finished with double-digit returns (23% successful 2024 and 24% successful 2023).

Many investors are appreciative of the S&P 500's run, portion being cautiously optimistic astir what the aboriginal could hold. Although cipher tin foretell however the scale volition proceed to perform, determination is simply a large lawsuit happening this twelvemonth successful America that has humanities context: the midterm elections.

Unfortunately, this hasn't been historically bully quality for investors. Let's instrumentality a look astatine why.

For perspective, I privation america to look astatine the S&P 500's show implicit the 12 months starring up to the midterm elections, which hap successful November. Specifically, we'll look astatine the index's largest drawdown, which is however overmuch it drops from its highest to lowest peak.

Data source: Longview Economics.

Looking astatine these results, it's hard to contradict the consistency. A fewer times whitethorn beryllium a coincidence, but a signifier implicit decades is worthy paying other attraction to and preparing accordingly.

There typically isn't a azygous crushed for these drawdowns starring up to the midterm elections; it's a operation of things. The main factor, however, whitethorn beryllium the uncertainty that comes with the midterm elections.

The midterms (and elections successful general) mean determination could beryllium a alteration successful Congress and different governing bodies. This means that laws surrounding taxes, industry-specific regulations, authorities spending, and commercialized policies are taxable to change, having a domino effect connected concern decisions.