S&P 500’s 8-Week Rally Faces Historical Headwinds From Midterm Year Patterns
Historical midterm summers have witnessed dramatic declines. The benchmark index plummeted over 25% in 1930, dropped nearly 30% in 1974, and tumbled 24% in 2002 — all during midterm cycles. Even when these extreme cases are excluded from the calculation, the average return for this period registers virtually zero, showing a minimal gain of just 0.006%. The Cboe Volatility Index is currently trading at 16.7%. Charlie McElligott, a strategist at Nomura, has highlighted this level as notably elevated for a market experiencing such a robust upward trajectory, indicating potential underlying vulnerabilities. Jeffrey Hirsch, who publishes the Stock Trader‘s Almanac, explains that midterm election years typically redirect investor attention from corporate earnings toward political uncertainty. While he doesn’t anticipate a full bear market, he suggests the market may experience “sideways choppy” movement throughout the summer months. Jay Hatfield from Infrastructure Capital Advisors highlights a cyclical seasonal trend: equity markets typically demonstrate strength during earnings reporting periods but show weakness in the intervals between them. Crude Oil Surge and Yield Increases Compound Market Concerns Meanwhile, international markets have experienced downward momentum over recent weeks due to escalating tensions involving Iran. Brent crude oil has rallied near $110 per barrel, fueled by supply chain disruptions affecting the Strait of
