S&P 500 Four-Year Bull Run Amid Summer Pullbacks
Stocks continue to defy the naysayers. While there have been significant pullbacks this summer, the major indexes are still on a 4-year roll that doesn’t happen often.
S&P 500 vs. Equal Weight S&P 500 Index Performance
At the time of this recording, the S&P 500 Index is up about 12% year-to-date. The equal weight S&P 500 Index is up 15%. That’s significant for several reasons. The S&P 500 Index is weighted, meaning the performance of the larger member companies count more than the performance of the smallest member companies. The equal weight index, as the name implies, gives each company in the index an equal share of performance. So, when the equal weigh index outperforms the standard index, it’s an indicator of broader market growth.
Mid-Term Election Market Volatility Warning
But, that all may come to a screeching halt over the next few weeks. And if it does, it can likely be blamed on the mid-term election.
August 18th Historical Peak: S&P 500 Equal Weighted Index in Mid-Term Election Years
Take a look at these charts from a Yahoo Finance article.
The first one shows that August 18th is historically the peak for the S&P 500 equal weighted index in mid-term election years, going back to 1990. That’s represented by the purple line. You can see when compared to the green line, which represents all other years, the months prior to the mid-term election can be quite ugly. The white line is this year. It remains to be seen if 2026 bucks the historical trend.
S&P 500, NASDAQ, and Russell 2000 Average Declines in Mid-Term Election Years
The second chart shows that mid-term election weakness spreads across many major indexes. Since 1990, the S&P 500 is down an average of 5.1% from August 18th through October 11th in a mid-term election year. The equal weight S&P is down 6%, the NASDAQ down almost 7%, and the Russell 2000 has dropped nearly 8%. In all other years, that same stretch has yielded positive returns on average.
Post-Election Stock Market Recovery History
If that happens again this year, we shouldn’t panic. Let’s go back to the first chart. Take a look at the purple line again. While Index has dropped in the months leading up to the mid-term election, it shoots back up once the results are in.
12-Month S&P 500 Returns After Mid-Term Elections: 18 for 18
We did a Fastest 4 video a few weeks ago that showed the S&P 500 Index has been positive 12 months after the mid-terms 18 of the past 18 times.
Market Uncertainty, Congressional Control, and Corporate Earnings Fundamentals
The market doesn’t like uncertainty. Control of Congress is up in the air for the next few months. That uncertainty is likely to create volatility. But, the market always returns to fundamentals. And the fundamentals of corporate earnings is strong.
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