I heard that in midterm election years, October is most often the low of the year. If I buy now, will stocks rise by year-end this time too? I wonder whether that rule still works with rates and oil this high.
2026-10-04
The "midterm-year October low" statistic is stronger than you might think
The statistic presented on YouTube is not an exaggeration. In all 16 midterm cycles since 1962, there was a decline between mid-August and Election Day, with an average drawdown of 8.1%, and 10 of them bottomed in October (Advisor Perspectives, 2026-08-18). Going back to World War II, the S&P 500 rose after the midterm-year October low 18 out of 18 times, with an average gain of about 10% (citing LPL Financial, CNBC 2018-11-02). Returns over the 11 months after the election were also positive in all of the last eight cycles.
This year's Election Day is November 3. Statistically, we are right in the middle of the "bottom-finding period."
But 2026 starts from a different place
Past patterns are usually explained by a political factor: "a rebound once election uncertainty clears." But what is weighing on stocks this year is not the election but energy inflation from the Hormuz blockade. Political uncertainty ends on November 3, but oil and rates won't be resolved on Election Day. If anything, energy is entangled in ways that heighten political risk, as diesel prices (above $6.50 a gallon) sway voters in states like Iowa and policies such as a diesel export ban are floated (Maeil Business, Wall Street Wolbu).
There is also a recent exception to the statistic. In 2018, stocks seemed to bottom in late October, but continued Fed tightening and rising rates pushed them even lower through December 24. The common feature of years when the "October low" rule broke is that the Fed was tightening. The Fed hiked in September this year too, and a further hike in December remains possible.
Three possible paths ahead
| Scenario | Conditions | S&P 500 path |
|---|---|---|
| Textbook October low | The 10/7 minutes are benign and Brent stabilizes below $100 | A 3-5% correction in October, then a rebound around the election, with an attempt at 8,000 by year-end |
| 2023-style rate-driven correction | Long-term rates keep rising past 5.3% | Falls to 7,300-7,400, then rebounds when rates turn. The bottom could be delayed to November |
| 2018-style delayed bottom | A December hike is confirmed and oil breaks above $108 on escalation in Hormuz | The October rebound fails and new lows are set through year-end |
Index levels by scenario are estimates combining the historical average drawdown (around 8%) with the report's risk scenarios.
So should you buy now?
- "It's October, so buy" is not enough of a reason. For the statistic to work, the conditions for a bottom are needed, namely a halt in the rise of long-term rates. Use seasonality only as a supplementary timing indicator.
- Split your buying plan in advance. If you decide ahead of time to deploy part of your cash when the S&P 500 is 5% below its high and the rest at 8% below, you can lower your average cost in both the textbook and 2023-style scenarios.
- Stop if a 2018-style signal appears. If the 10/7 minutes contain language that effectively locks in a December hike and oil climbs back above $108, tightening is winning over seasonality. In that case, defer further purchases and keep 10-20% in cash to stay safe.