June has historically been a modest month for stocks. But when it arrives during the second year of a U.S. presidential cycle, Bank of America says investors should brace for a much more defensive market backdrop.
In a note shared with clients this week, technical strategist Paul Ciana found that June in Year 2 of the presidential cycle — the same setup investors face in 2026 under President Donald Trump‘s second term — has historically favored the U.S. dollar, flatter Treasury curves, stronger oil prices and weaker precious metals, while equities struggled.
“June in year 2 of the US Presidential Cycle carried a defensive tone,” Ciana said.
History Suggests A Tough June For Stocks In Second Year Of Presidential Term
The S&P 500 – as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) – has historically gained 0.82% in June, but in the second year of a presidential cycle, the benchmark index has fallen an average 1.33%, finishing higher only 42% of the time.
The Nasdaq 100 — tracked by the Invesco QQQ Trust (NASDAQ:QQQ) — sees its average 0.81% June gain reverse to a 1.64% loss in the second year of a presidential term.
Even the Russell 2000, normally June’s strongest equity benchmark with an average gain of 0.88% and a 64% win rate, turns negative in Year 2, falling an average 2.07%.
International markets have historically fared even worse.
Germany’s DAX has been the weakest major index in Year 2 Junes, declining 75% of the time and posting an average loss of 2.94%.
| INDEX | JUNE AVG % ALL YEARS | UP RATIO ALL YEARS | JUNE AVG % YEAR 2 PRES. | UP RATIO YEAR 2 PRES. | JUNE 2018 |
| Russell 2000 | +0.88% | 64% | -2.07% | 45% | +0.58% |
| Hang Seng | +0.84% | 57% | -0.14% | 50% | -4.97% |
| S&P 500 | +0.82% | 58% | -1.33% | 42% | +0.48% |
| Nasdaq 100 | +0.81% | 53% | -1.64% | 40% | +1.05% |
| Nikkei 225 | +0.56% | 62% | -1.12% | 46% | +0.46% |
| Dow Jones Ind. | +0.34% | 50% | -1.12% | 39% | -0.59% |
| ASX 200 | -0.05% | 52% | -2.44% | 25% | +3.04% |
| DAX | -0.09% | 45% | -2.94% | 25% | -2.37% |
| EURO STOXX 50 | -0.28% | 44% | -2.55% | 33% | -0.32% |
| FTSE 100 | -0.79% | 40% | -1.77% | 30% | -0.54% |
Buy Dollars, Especially Against Emerging Markets
The biggest seasonal shift appears in currencies.
While June normally favors a weaker dollar against the Swiss franc, Australian dollar and Brazilian real, Year 2 flips the script.
The dollar gained 4.00% versus the South African rand a perfect 6 of 6 times, 3.93% against the Chilean peso (also 6 of 6) and 3.17% against the Brazilian real. The greenback also rose 1.25% versus the Aussie dollar and 1.07% against the Mexican peso, each 5 of 6 times.
“The USD rallied vs higher beta currencies, the US curve flattened, Brent oil was supported and precious metals declined,” Ciana said.
Commodities split. Brent crude gained 0.85% on average 67% of the time, while precious metals sold off: gold fell 1.14%, and silver was down 2.47%, dropping nearly 80% of the time.
One caveat matters. The year-two sample is thin — just six observations for most currencies and a handful for some indices — and Ciana’s own occurrence tables flag the small counts.
Seasonality is a probabilistic lean, not a guarantee, and 2018, the comparable year-two of Trump’s first term, saw the Nasdaq 100 buck the trend with a 1.05% gain.
Photo: Pla2na/Shutterstock
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