October Historically Best Month for Stocks in Midterm Years, Data Shows

October has historically been the strongest month of the year for U.S. stocks during midterm election years, according to seasonal data compiled by Carson Group chief market strategist Ryan Detrick. Since 1950, the S&P 500 has averaged a 3% gain in October during midterm years and posted positive returns 73.7% of the time, making it the best-performing month of the cycle. November ranks a close second, with an average gain of 2.7% and positive returns 78.9% of the time.

The pattern comes as markets exit September, which Detrick's data identifies as the weakest month of the midterm cycle, with an average decline of 0.8%. In a chart posted on X on Sept. 20, Detrick wrote «Almost there,» signaling that the historically difficult stretch is nearing its end. The seasonal trend aligns with research from major Wall Street firms, which have studied midterm election years for decades.

A recent report from UBS Global Research examined 19 midterm elections since 1950 to assess their impact on equities and volatility. During midterm years, S&P 500 returns have averaged about 6% from September through year-end, compared with roughly 4% in other years. Through March of the following year, the average return has been approximately 14%. Negative returns occurred only in three instances: 1978 amid inflation, 2002 during the bursting of the tech bubble, and 2018 amid trade tensions and Federal Reserve rate hikes.

«The market has typically been choppy from August-end until early October, with a median decline of -1.4%, before the market starts to rally through year-end and into the next year,» UBS strategist Maxwell Grinacoff wrote in a research note. He noted that the rally around midterm elections has historically outpaced the market's average performance in other years, and that equity volatility follows a similar pattern. September and October have been the most volatile months on record since 1928, particularly during midterm years, though volatility has ultimately normalized after the elections and into year-end.

J.P. Morgan Asset Management also finds that the S&P 500 has historically been slightly negative on average in each of the first three quarters of midterm years, before averaging a 6.6% gain in the fourth quarter. The firm notes that markets have historically begun rallying less than a month before Election Day, as election-related uncertainty diminishes. However, J.P. Morgan emphasizes that fundamentals — including monetary policy, economic growth, labor markets, corporate profits, and valuations — are more important indicators of future returns than the election calendar itself.

This year's setup adds tension to the historical pattern. The S&P 500 was up approximately 13% year to date on a total return basis as of September 18, putting 2026 on track for a fourth consecutive year of gains. That raises the question of whether a historically strong fourth quarter can still play out after the market has already banked such substantial gains, or whether current valuations and the economic backdrop will alter the seasonal trend.

Investors weighing the historical data against current market conditions face a familiar dilemma: seasonal patterns offer a useful framework, but they are not guarantees. The midterm-year rally has been remarkably consistent over the past seven decades, yet the three negative years show that external shocks — inflation, bursting bubbles, and policy tightening — can override historical tendencies. With the 2026 midterms approaching, market participants will be watching whether this year follows the script or breaks from it.

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Delaney Sawyer

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Delaney Sawyer covers public affairs, politics, business, culture and daily news for Core Memo. The role focuses on verification, context, and clear explanations for readers.

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