“Someone will always be getting richer faster than you. This is not a tragedy.” Charlie Munger
Well, that’s a wrap on the first half of 2026. After all the hand wringing this spring over the Middle East, oil prices, and the Fed, the S&P 500 closed the first six months up a very solid 9.6% (excluding dividends). The index’s second quarter gain of 14.9% was the best Q2 in a midterm year we’ve ever seen and the fifth-best Q2 of any year since 1950.
So Much for the Worst Quarter of the Cycle
If you break the four-year presidential cycle into 16 quarters, Q2 of the midterm year has historically been the single worst of the bunch for the S&P 500, down 2.8% on average and higher less than half the time. This makes the nearly 15% gain this year all the more impressive.
A Big Q2 Should Have Bulls Smiling
A monster quarter like this often begets more strength historically, not less. We found nine other times the S&P 500 gained double digits in Q2, and the forward numbers are about as good as it gets: Q3 was lower only once, and Q4 was never lower. Even better, the final six months of the year averaged a gain of 11.7%, more than double the 4.9% you get in an average year. Big up quarters aren’t something to fear. Historically, they’ve been a sign the trend has legs.
More Good News
We found 41 other times the S&P 500 has been up 10% or more in a quarter since 1950. Momentum is the word of the day, as the next quarter and next two quarters the index was up more than 85% of the time with a median return a year later of 13.4%. File this under reasons to remain bullish in 2026.
Bulls Play With Slingshots
Adding to the concepts above, in Q1 the S&P 500 was down close to 5%. That might feel like years ago at this point, but it is true—2026 actually had a rough start.
We found 17 times there was a greater than 10% quarter that followed a negative quarter and boy, bulls will like this one.
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The next quarter was higher 16 times and two quarters later gained 15 times, with some very big returns mixed in there. The bottom line, this is yet another reason to expect the bulls may have some fun the rest of 2026.
July Is Here, and It’s Been on a Heater
Can you believe the year is already half over? More good news for the bulls: July has become one of the best months on the calendar. The S&P 500 has been higher in July an incredible 11 years in a row and 13 out of 14 years, and thanks to that streak, no month has a better average return over the past 20 years. Pick your reason, but July has been especially kind under President Trump, higher all five times (five for five) for an average gain of 2.9%.
The Sweet Spot for the Rest of the Year?
We flagged this one last year, and it worked, so we’re running it back. When the S&P 500 is up between 5% and 10% year to date at the midpoint of the year (right about where we sit now), the second half tends to do quite well, higher nearly 88% of the time.
It’s not the strongest setup in the world, but it’s far from weak: the worst full-year outcome from here was exactly flat (2011), so a large decline from these levels would be historically rare. Not too hot, not too cold. Just another reason we’re comfortable continuing to ride the wave in 2026, while staying diversified for whatever the second half decides to throw at us.
Thanks as always for reading what our team has to say. This year hasn’t been easy, with many worries and scary headlines out there. Yet, a 10% return the first half of the year is quite impressive and we don’t think the ride is over just yet. Be sure to watch our latest Glass Half Full video, we discussed Four Reasons to be Thankful this July 4th. Not to mention, I was decked out in my July 4th gear!
For more content by Ryan Detrick, Chief Market Strategist, click here.
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