Historically in the US, midterm election years have often seen more volatility or even corrections in the months leading up to the election; however, the market typically strengthens significantly after the election.
But this traditional seasonal trend, as seen in 2026, has not materialized so far. A JPMorgan report suggests that this seasonality may even fail this year, influenced by factors including the unresolved Middle East conflict and the potential for continued EPS growth exceeding 20% and further profit margin expansion in the third quarter.
If JPMorgan's assessment is incorrect and the traditional midterm election seasonality reappears, they recommend considering buying healthcare, as it typically performs well before midterm elections. This is because sectors like healthcare and pharmaceuticals are relatively less affected by economic cycles during periods of high market uncertainty, making them potentially more resilient. Then, on the actual voting day, further increase equity positions.
