Deutsche Bank's global head of macro research, Jim Reid, said on October 27 that based on nearly a century of historical data, US stocks may be near the bottom of their final pullback of the year, after which a seasonal year-end rally could follow.
Reid noted that October 27 happens to be the historical average date on which the S&P 500 Index bottoms out in its final pullback during a typical year. At the same time, the US midterm elections will be held on November 3, and historically the period from early October to the end of the year in election years has often been a relatively strong phase for US stocks. However, he emphasized that seasonal patterns do not guarantee stock market gains, and the Iran conflict, artificial intelligence investment prospects, and French political risks could still unsettle the market.
A century of historical data shows late October is usually the bottom of the final pullback for US stocks
Reid studied the average trajectory of the S&P 500 Index within each calendar year since 1928, separating US midterm election years from non-midterm election years. The data shows that in a typical year, the S&P 500 usually reaches a阶段性 high around September 2, then falls back to a low around September 30. After a brief rebound, the index often weakens again in late October and forms its final seasonal low of the year around October 27. After that, the S&P 500 typically continues to rise in the historical average path until the end of the year. Reid pointed out that October 27 is the historical average date on which the final pullback bottoms out in a typical year. According to this seasonal pattern, US stocks may now be close to their last阶段性 low of the year.
In 21 of 23 midterm election years, US stocks rose over the following three months
Compared with ordinary years, the stock market performance in US midterm election years shows more pronounced seasonal characteristics. Reid's research shows that in a typical midterm election year, the S&P 500 usually reaches a阶段性 high in late April, then gradually declines by about 4% to 5% as election uncertainty increases, and bottoms out around early October. In the past 23 midterm election years, 21 times the S&P 500 rose within three months after early October, accounting for about 91%. Reid believes that the 2026 US stock market performance basically fits this historical pattern, but the pullback has been relatively mild. On May 29 this year, the S&P 500 set a then-record closing high, with a year-to-date gain of about 11%. However, after nearly five months, the index's further gain from that high is still less than 1%, indicating that although US stocks have not experienced the明显的 decline typical of midterm election years, upward momentum has weakened significantly. As the November 3 midterm elections approach, two historically favorable factors—the election cycle and the year-end seasonal rally—are now converging.
Historical patterns do not guarantee gains, and risks from Iran, AI, and France remain
Although historical data points to a year-end rebound, Reid did not assert on that basis that US stocks have already bottomed. He noted that market performance varies greatly across years, and even in midterm election years, bear markets have occurred. Historical average trajectories can only reflect the statistical characteristics of past markets and cannot eliminate risks brought by the current economic and political environment. Among them, the Iran conflict could still affect global inflation and interest rate prospects through energy prices; massive capital investment in artificial intelligence and related financing issues continue to draw investor attention; and France's fiscal and political situation could also intensify volatility in European markets. Reid emphasized that these risks will not automatically disappear simply because late October has historically usually been a stock market low. Nevertheless, from a historical seasonal perspective, October 27 falls within the time window when US stocks typically end their final pullback and begin a year-end rally, and the US midterm elections on November 3 further strengthen this statistically favorable factor.
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