After a rocky start to the year, stocks more than made up for it in the second quarter. As geopolitical headlines faded, investors turned their attention back to what truly drives long-term stock appreciation: corporate earnings.

History offers an encouraging signal here. When the S&P 500 gains more than 10% in the second quarter, as it did this year, the months that follow have tended to be strong. The chart below from Ryan Detrick shows Q3 and Q4 returns following a powerful second quarter. Under this rule set, the final six months of the year have been negative only once, with an average return of 11.7%.

This is especially notable in a midterm election year. As we’ve discussed throughout 2026, Q2 of a midterm year has historically been the weakest quarter of the entire four-year presidential cycle. The S&P 500 posting double-digit gains during a seasonally soft period is worth paying attention to. When an asset class outperforms its historical average to the upside, it can signal a stronger environment than many investors expect.

Looking ahead, July has typically been kind to stocks. Over the past 20 years, the S&P 500 has finished the month positive 80% of the time, with an average gain of 2.4% (source: EquityClock.com). And a look at the S&P 500’s seasonality chart shows that the first half of July tends to deliver the bulk of those gains.