Domestic equities have been on an amazing run over the past 67 days since the stock market low on April 8. The S&P 500 Index surged over 23% off the low as concerns over tariffs eased, corporate earnings surprised to the upside, and economic activity held up relatively well. Today, we examine what seasonal trends may tell us about the short-term outlook for equities.

 

Based on historical trends, July is one of the strongest months for stocks, with an average return of around 1.2% since 1950, ranking as the fourth-strongest month. In recent years, July performance has been even more pronounced than long-term averages, ranking as either the strongest or second-strongest month for equity returns, though past performance does not guarantee future results.

 

Stock Market Seasonals Tend to be Strong in July But...

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S&P 500 average monthly returns (1950–2025)

• Source: LPL Research, FactSet 07/15/25
• Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. The modern design of the S&P 500 Index was first launched in 1957. Performance before then incorporates the performance of its predecessor index, the S&P 90.

 

However, a closer look at the long-term data for equity returns in July shows that strength historically tends to be front-loaded into the first half of the month. On average, stocks trade down slightly after the middle of the month, before a late flourish recovers back to around mid-month levels. This year seems to be following this pattern fairly closely, with around a 1% return so far in July.

 

…July’s Stock Market Returns Tend to be Front-Loaded

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S&P 500 July Progression (1950–2024)

• Source: LPL Research, Bloomberg 07/15/25
• Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. The modern design of the S&P 500 Index was first launched in 1957. Performance before then incorporates the performance of its predecessor index, the S&P 90.

 

A slightly longer time horizon, out to three months, also shows a weakening scenario for stocks. Even inclusive of the strength of early July, the three-month period to the end of September is the second-weakest for equities, with only the upcoming August to October period worse. In fact, when homing in even more specifically on rolling three-month periods over the past 25 years, the three months from July 15 is the worst of the whole year with a negative return of -1.14%*.

 

• *Thanks to our partners at Bespoke Investment Group for this insight.

 

July to September — the Second-Worst Three-Month Period for Stocks

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S&P 500 average three-month returns (1950–2025)

• Source: LPL Research, FactSet 07/15/25
• Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. The modern design of the S&P 500 Index was first launched in 1957. Performance before then incorporates the performance of its predecessor index, the S&P 90.

 

Additionally, when examining historical data for periods like what we have just experienced (the S&P 500 gaining over 23% in 67 days), it shows that the next month tends to involve some consolidation. Based on the ten prior occurrences since 1950, many of which have been coming out of bear markets, the average one-month return is -1.0%, well below the all-periods one-month average of around 0.7%. This short-term weakness is however offset by strength seeming to beget strength over slightly longer look forward periods, with the three-, six-, and 12-month returns being well above long-term averages at 5.3%, 8.1%, and 14.8%, respectively. Note that some caution should be applied to the application of this data due to the small number of historic observations and the specificity of the study.

 

Historic Trends Point to Near-Term Consolidation Before Reacceleration

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S&P 500 average returns (1950–2025)

• Source: LPL Research, FactSet 07/15/25
• Disclosures: Indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. The modern design of the S&P 500 Index was first launched in 1957. Performance before then incorporates the performance of its predecessor index, the S&P 90.

 

Given the combination of weakening seasonal trends and how stocks have performed following historically similar periods, it would not surprise us at all if stocks took a breath here and traded sideways, or slightly down, in the near term. Seasonal trends get a lot stronger from October onwards (after what is traditionally the weakest month — September), and the outlook following strong short-term performance may also become more supportive for strength as we head into fall.

 

LPL’s Strategic and Tactical Asset Allocation Committee (STAAC) maintains its tactical neutral stance on equities. Investors may be well served by bracing for occasional bouts of volatility until trade uncertainties are resolved. LPL Research advises against increasing portfolio risk beyond benchmark targets currently, as the market seems to be factoring in a lot of positive news. LPL Research continues to monitor tariff negotiations, economic data, earnings, the bond market, and various technical indicators to identify a potentially more attractive entry point to add equities on any potential weakness.

 

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