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S&P 500: Presidential Cycle Seasonality Remains on Track
The historical seasonality of the S&P 500 within the 4-year presidential cycle, as compiled by Nautilus, appears to be holding, with no material deviations evident thus far.
As is customary, the summer months are expected to be relatively subdued, reflecting seasonal declines in market participation. However, as the midterm elections draw nearer, equities may begin to gather momentum, consistent with the tendency for markets to firm ahead of politically significant periods.
At the same time, increasing speculation that Kevin Warsh may be appointed the Fed’s Chair in late May introduces an additional supportive element. A potential shift towards a more accommodative stance, including the prospect of rate cuts, could provide a meaningful tailwind for risk assets.
In terms of outlook, the base case points to a period of consolidation over the summer, followed by a more constructive phase into year-end. Under supportive conditions, the index could advance by approximately 8–12% from current levels, with a more optimistic scenario allowing for gains of up to 15%, albeit accompanied by heightened volatility.
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