S&P 500 & the Presidential Cycle: Bear Market in 2026?S&P 500SP:SPXSwissquoteThe U.S. presidential cycle is a cyclical approach to the stock market suggesting that S&P 500 performance tends to follow a recurring pattern over the four years of a presidential term. This cycle reflects the relationship between political decisions, fiscal and monetary policy, and investor psychology. Historically, the first year of the term (post-election) is marked by economic and fiscal adjustments, often accompanied by moderate gains. The second year, known as the “midterm year,” is usually more hesitant: markets tend to be volatile amid political uncertainty and potential unpopular reforms. This second year of the presidential cycle is typically the weakest of the four and the most prone to a significant S&P 500 consolidation — corresponding in our case to the year 2026. In contrast, the third year of the term almost always stands out as the most favorable for equities, as the administration seeks to boost growth ahead of the next election campaign, often through more accommodative fiscal or monetary measures. Finally, the fourth (election) year tends to remain positive on average, although performance often flattens as electoral uncertainty increases. From this perspective, 2026 will mark the second year of Donald Trump’s presidential cycle — traditionally the most fragile for equity markets. From a technical standpoint, the S&P 500 has recently reached major resistance zones near its historical highs after a strong post-election rally. Several momentum indicators now show signs of exhaustion, while Shiller’s P/E ratio stands at historically elevated levels, indicating stretched valuations. In this context, it is plausible that 2026 will bring a phase of consolidation for the S&P 500, or even a more pronounced correction. Institutional investors may adopt a more cautious stance, awaiting greater clarity on fiscal trajectories, Federal Reserve rate policy, and the impact of new government measures. This cooling phase would be natural after several years of sustained growth and could form a healthy foundation for the next bullish impulse, traditionally observed ahead of the pre-election year — 2027. DISCLAIMER: This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions. 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