Historically
one of the market's stronger months, July typically sees a consistent
upward trend across all major indexes (solid lines), often driven by optimism ahead of
second-quarter earnings. Over the last 21 years (2005–2025), gains have
built from a strong first trading day, with the NASDAQ leading at an
average gain of just over 3%. While the S&P 500, DJIA, and Russell
indexes also show robust positive trends, their momentum generally slows
after mid-month.
However, midterm election years tell a different story (dashed lines). Performance during these periods is notably weaker and more volatile: the DJIA and S&P 500 manage only modest gains, while small-caps (Russell 2000) historically struggle the most, often finishing July in negative territory. Ultimately, while seasonal trends favor equities, the midterm backdrop warns that volatility can emerge unexpectedly.
Historically strong and earnings-driven, July favors broad index gains—especially the NASDAQ—
but midterm election years routinely trigger underperformance and small-cap volatility.
but midterm election years routinely trigger underperformance and small-cap volatility.
However, midterm election years tell a different story (dashed lines). Performance during these periods is notably weaker and more volatile: the DJIA and S&P 500 manage only modest gains, while small-caps (Russell 2000) historically struggle the most, often finishing July in negative territory. Ultimately, while seasonal trends favor equities, the midterm backdrop warns that volatility can emerge unexpectedly.
Reference:
July is historically one of the year's strongest months, ranking third since 1950 for both the
DJIA and S&P 500 during midterm election years with average gains of 1.6% and 1.3%.
DJIA and S&P 500 during midterm election years with average gains of 1.6% and 1.3%.
See also: