As we approach the midterm elections, investors may be wondering if the “Santa rally” will come early this year. According to a recent analysis by Deutsche Bank, the stock market has historically shown a pattern of rebounding in late October, with equities typically rallying into year-end. In fact, since 1928, the S&P 500 has risen over the three months following early October in 21 of the past 23 midterm years.

While this year’s pattern has been relatively mild, with the S&P 500 gaining less than 1% since May 29th, the midterm elections are now just one week away. As investors prepare for the vote, election-related and year-end seasonality are lining up, suggesting that the seasonal window for a year-end rally may be opening right now.

Of course, as always, there are risks to consider. Geopolitical tensions remain, including those around Iran, AI, and France, and these unresolved issues could still impact the market. However, history suggests that seasonality is a key factor to consider when evaluating the stock market’s performance around the end of the year.