Argus

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Jul 01, 2026

Market Outlook

Bullish

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Short

Summary

Stocks fended off fears of war, high oil prices, inflation, and tech bubbles to post a modest gain in 1H26. That said, the markets are now entering the poorest performing quarter of the year. By our calculations, 3Q performance has been underwhelming compared to 1Q, 2Q, and 4Q returns. Indeed, we analyzed data collected on S&P 500 performance from 1980-2026. The strongest quarter has been the fourth, which has generated average gains of 4.7%. First- and second-quarter returns have averaged 2.0% and 3.0%, respectively. On the other hand, 3Q is barely positive, with an average return of 0.5%. Now not every 3Q is a disaster.  In fact, the "win percentage" for the quarter is 63%, which means that markets deliver positive returns in the quarter almost two-thirds of the time. But the actual quarters that are negative can really hurt: -12% in 1981, - 15% in 1990, - 15% in 2000, - 18% in 2001, -14% in 2008 and -14% in 2011. Last year, stocks popped 7.5% in 3Q. Some of the events that occurred in these quarters are random: the September 11 attacks in 2001; the Lehman bankruptcy in 2008; and the S&P U.S. Treasury downgrade in 2011. But 3Q is also when companies better know if they are going to meet their estimates for the year. As s

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