Deutsche Bank, citing nearly a hundred years of market data, indicates that October 27 has historically often marked the point when the S&P 500 completes its final bottom of the year, after which the index typically enters a one-way upward trend through year-end.
According to Deutsche Bank's Global Head of Macro and Thematic Research, Jim Reid, in his latest "Chart of the Day" (CoTD) report, the seasonal pattern of the S&P 500 points to the same conclusion in both midterm election years and non-midterm election years: the last low of the year occurs around October 27, after which the "Santa Claus rally" begins. He wrote: "If history is any guide, today is often the moment when reindeer wake their masters and the Christmas rebound begins to gather strength."
Against the current market backdrop, the 2026 trajectory closely matches the historical script for midterm election years. The S&P 500 hit a new high for the year on May 29, up about 11% year-to-date, but has since moved almost sideways for nearly five months, with cumulative gains of less than 1%. With the midterm elections approaching on November 3, Deutsche Bank believes that seasonal tailwinds and election-cycle tailwinds are forming a rare convergence.
A Century of Data Reveals the Seasonal Pattern
Deutsche Bank's report, based on the trajectory of the S&P 500 since 1928, divides historical paths into three curves for analysis: midterm election years, non-midterm election years, and the overall average.
The overall average path shows that the S&P 500 typically reaches a stage high around July 18, then edges slightly higher to a yearly peak around September 2, followed by the customary autumn correction, forming a low around September 30, briefly rebounding and then pulling back again, and completing its final bottom of the year around October 27. From that point onward, the index in a typical year exhibits a largely one-way upward trend through to year-end.
Jim Reid noted that this pattern also holds in midterm election years, albeit with a different path. In midterm election years, the S&P 500 usually peaks in late April, then declines steadily by about 4% to 5% as election uncertainty heats up, bottoming out in early October. Deutsche Bank previously cited research by analysts Binky Chadha and Parag Thatte showing that in 21 of the past 23 midterm election years, the S&P 500 posted gains within three months after early October -- driven by the dissipation of uncertainty, the market having already priced in bad news, political gridlock often being friendly to markets, and historically strong pre-election-year performance expectations.
The 2026 Trajectory Closely Matches the Historical Script
Deutsche Bank's report notes that the 2026 market trajectory is a "mild version" of the historical midterm election year script. The S&P 500 closed at a record high on May 29, up about 11% year-to-date, but over the following nearly five months its gains have almost completely disappeared, and it is currently up less than 1% from the start of the year.
This stalled pattern is consistent with the typical performance of midterm election years in the run-up to the vote -- the market becomes deadlocked at the peak of uncertainty, waiting for the election results to be finalized before repricing. With the November 3 midterm elections only a week away, Deutsche Bank believes that midterm election seasonality and year-end seasonality are converging simultaneously, creating a dual-tailwind window rarely seen in history.
Seasonality Is Not Omnipotent, and Risks Should Not Be Overlooked
Deutsche Bank explicitly cautions in its report that enormous individual variation lies behind seasonal averages, and historical patterns are not the same as destiny. The report specifically cites cases such as 1962, 1974, 2002, and 2022 -- all midterm election years in which independent bear markets unrelated to the elections occurred, and seasonal tailwinds failed to prevent sharp market declines.
Jim Reid also noted that current market concerns -- including the situation in Iran, the outlook for the artificial intelligence industry, and French political risk -- will not automatically dissipate just because the seasonal pattern has arrived. He stressed that seasonal analysis only provides a historical probability reference and does not constitute investment advice, and that investors need to make independent judgments based on their own circumstances.
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