Jim Reid found October 27 historically marks the S&P 500’s autumn low, and SPY gained 0.57% as small caps surged over 1%.
RSP hedges megacap concentration risk. Microsoft alone holds nearly 5% of SPY, meaning one bad earnings report can erase seasonal gains.
The S&P 500 has averaged +17% returns in the year after midterm elections, finishing higher in 17 of the last 19 such years.
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Deutsche Bank’s Global Head of Macro Research, Jim Reid, sent clients a note on October 27 that said: “Today, 27 October, is historically when the final dip of a typical year bottoms out.” Stocks rose that day. The S&P 500 gained 0.60% to 7,722.60, and the State Street SPDR S&P 500 ETF Trust (NYSEARCA:SPY) added 0.57% to close at 769.71.
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Growth and small-cap stocks led the gain. The Nasdaq Composite rose 1.18%, the Russell 2000 gained 1.16%, and the SOX semiconductor index jumped 3.60%, while the Dow edged up just 0.03%.
A calendar average is a thin reason on its own to put more money in, though. The Fed announces its decision on October 28. Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) report after the close that evening, Amazon (NASDAQ:AMZN) follows on October 29, and the midterm elections are on November 3.
How Deutsche Bank Landed on October 27
Reid’s research tracks the S&P 500’s average path through the calendar year going back to 1928, with midterm and non-midterm years graphed separately. In a typical year, the index peaks around September 2 and hits a low near September 30. It then rebounds and makes one last dip, bottoming in late October.
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Midterm years tend to peak in late April and slip into an early-October low as uncertainty about the election builds. Reid found that the S&P 500 was higher over the three months from early October in 21 of the last 23 midterm years.
Several factors likely explain the pattern: many mutual funds end their fiscal year in October and sell losing positions before it closes, election risk fades once the votes are counted, and new money tends to flow in at year-end.
The S&P 500’s lowest close of the month came on October 23 at 7,623.68. The index gained 1.30% over the next two sessions, which leaves it up 0.93% from its September 30 close of 7,651.54.
The Conference Board’s consumer confidence index came in at 91.7, well above the 81.0 forecasters expected. The VIX, which measures how much volatility traders expect, fell 4.73% to 17.52.
Oil, Yields and Megacaps Can Override the Calendar
Reid qualified his own call: “Seasonality isn’t destiny, and worries around Iran, AI and France won’t mysteriously vanish.” He also warned that averages hide wide year-to-year swings, and that some midterm years brought bear markets.
Brent crude fell 1.67% but still settled at $113.88, and the 10-year Treasury yield ended the day at 4.995%. Oil at that price eats into household budgets, and a yield that close to 5% makes bonds a real alternative to stocks.
Microsoft alone made up 4.91% of SPY as of March 17, and technology companies hold most of the fund’s top ten spots. A single disappointing megacap report can outweigh any seasonal lift.
Carson Group chief market strategist Ryan Detrick wrote on X on October 18, 2026. “Historically, you tend to see late October major lows in midterm years.”
The Kobeissi Letter found that since 1950, the S&P 500 has averaged a +17.2% return in the year after a midterm election. It also found the index finished higher in 17 of those 19 years.
What the Seasonal Setup Means for SPY Investors
Several factors support SPY heading into year-end. The fund is up 12.87% year to date, consumer confidence beat forecasts by a wide margin, and post-midterm history favors owning stocks for the following year.
Dollar-cost averaging across the Fed decision and the November 3 vote is one approach investors use to capture a seasonal average without trying to pick the exact low.
Investors concerned about megacap concentration can research the Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP) as an alternative. It owns the same 500 companies in equal amounts, so a miss from one megacap does less damage. It also gives you broader participation, as small caps showed on October 27.
The level to check is the October 23 low of 7,623.68. If the S&P 500 closes below it after the Fed decision and the megacap reports, the seasonal low did not hold this year, and the seasonal case would weaken.
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