The familiar Wall Street adage to "sell in May and go away" faces fresh scrutiny as investors decide whether to trust calendar-driven strategy or follow the market's recent surge. The S&P 500 has staged a rapid recovery, erasing almost a 10% downturn in just 11 trading days after a selloff tied to disruptions in global oil supplies.
That swift snapback has left market participants debating whether the worst of the pullback is behind us or whether the often-turbulent May through October stretch could still produce losses. Historical averages paint a mixed picture: going back to 1945, returns for the May-October period on the S&P 500 average only about 2%, compared with nearly a 7% gain for the November through April span, according to CFRA data. Yet the pattern over the past decade has been stronger, with May-October delivering roughly a 7% gain and last year's 22.1% surge included in that performance.
Momentum versus seasonality
Market strategists caution against reflexively unloading equity risk simply because the calendar turns to May. "You hate to say to ignore 'sell in May, go away' ... but it hasn’t worked at all in the last decade," said Ryan Detrick, chief market strategist at Carson Group. He warned that investors who mechanically exited positions in May, shifted to cash, or moved to defensive posture over the summer would have missed significant gains.
Supporting that view, a Reuters analysis shows a hypothetical $10,000 investment continuously held in the S&P 500 since May 2016 would have grown to roughly $34,000. That outcome is nearly double what an investor would have achieved by adopting a sell-in-May approach that kept proceeds in cash through the summer.
Several factors this year have tilted the argument away from mechanical seasonality. The market recovery followed a period of fear about a broader escalation of the U.S.-Iran conflict, and falling anxiety on that front helped markets rebound. In addition, robust corporate earnings have buoyed investor sentiment, and the U.S. economy has demonstrated resilience in the face of the energy shock tied to the geopolitical tensions.
"If there were ever a year where you might want to throw seasonality out of the window, it might be this one," said Jim Carroll, portfolio manager at Ballast Rock Private Wealth.
Midterm calendar and policy change keep risks on the table
At the same time, there are clear reasons for investors to remain cautious rather than assume the seasonality rule no longer matters. Sam Stovall, chief investment strategist at CFRA Research, highlighted the significance of 2026 being a U.S. midterm election year. In five of the last ten midterm years, the S&P 500 fell between May and October, with an average decline of about 1.5%, according to a Reuters analysis. That record suggests political cycles can produce countervailing pressure on markets during the summer months.
Other unresolved dynamics add to uncertainty. The U.S.-Iran conflict remains unresolved and could impose a drag on global growth, posing risks especially to energy markets and broader economic activity. Meanwhile, leadership change at the Federal Reserve is expected, with Kevin Warsh anticipated to replace Jerome Powell as Fed chair. Analysts anticipate a bumpier path for interest rates under the new leadership, which could complicate the outlook for interest-rate-sensitive sectors.
Despite these headwinds, strategists point to the power of market momentum. CFRA data shows that since World War Two, after the market has recovered losses in pullbacks of 5.5% to 9.9%, it has typically climbed more than 8% in the ensuing three months. That historical tendency suggests that strong, quick recoveries can presage further gains in the near term.
"Yes, it’s a midterm year. Yes, 'sell in May' is coming, but the trend going into this is very important," Detrick said, underscoring the argument that recent direction and underlying fundamentals deserve as much attention as seasonal patterns.
Bottom line
Investors weighing whether to reduce equity exposure this May face a choice between a time-tested seasonal rule and a market that has recently rebounded on improving risk sentiment and solid corporate earnings. The decision hinges on how much weight is placed on short-term momentum versus structural risks tied to elections, geopolitics, and an upcoming change at the Federal Reserve.
Key data and quotations cited in this article
- S&P 500 erased a near-10% decline in 11 trading sessions.
- May-October average return since 1945: about 2% (CFRA).
- November-April average return: nearly 7% (CFRA).
- May-October return over the last decade: about 7%, including a 22.1% gain last year.
- Since May 2016, $10,000 invested continuously in the S&P 500 would have grown to about $34,000, versus roughly half that for a sell-in-May strategy that stayed in cash (Reuters analysis).
- In five of the last ten midterm years, the S&P 500 fell from May through October, averaging about a 1.5% loss (Reuters analysis).
- Historical CFRA finding: after recovering pullbacks of 5.5% to 9.9%, the market typically climbs more than 8% over the next three months since World War Two.