Why the S&P 500 and TSX Are Defying “Sell in May and Go Away”

Traditionally, many investors become more cautious heading into the summer months due to the old Wall Street saying, “sell in May and go away.” But in 2026, the stock market has continued to push higher despite inflation concerns, geopolitical tensions, and ongoing economic uncertainty. Strong corporate earnings and investor optimism have helped fuel gains across the S&P 500, Nasdaq, and Toronto Stock Exchange (TSX), leaving some investors wondering whether the seasonal investing strategy still holds up today.

What Is “Sell In May And Go Away”?

With the month of May nearly over, it’s fair to say that investors did not follow the old Wall Street adage of “sell in May and go away.” This phrase refers to the investing strategy that the stock market underperforms between May and October with more significant gains coming between November and April.

In theory, investors pull their money over the summer months and jump back in later in the year. But is this a wise investment strategy?

Despite a raft of red flags, including higher inflation, the war in Iran, and strong energy prices, the broader stock market, including the S&P 500, Nasdaq, and TSX, all posted strong gains in May and continue to perform well in 2026.

In fact, had investors decided to actually sell in May and go away, they would have missed out on monthly gains of 3.7% for the S&P 500, a 5.8% gain on the Nasdaq, and 2.5% increase on the TSX. With a week of trading still left in the month, it’s possible that the three indices could climb even higher.

Admittedly, there is precedence for being cautious in the May to October stretch. Since 1945, the S&P 500 has posted gains of just two percent during this period, far less than the 6.7% gain from the six-month November to April period.

Over the last decade though, the S&P 500 has done far better than the historical average, posting gains of approximately seven percent. That statistic was boosted in part by the S&P 500’s 22.8% gain in 2025, 13.3% move in 2024, and 10.1% increase in 2021.

Why Are Stocks Doing So Well Despite Warning Signs?

Why have investors ignored current warning signs and stayed in the stock market this May?

There’s a number of factors at play.

First, investors are optimistic that the war in Iran could soon be over. This should see oil prices retreat and be a boon for the global economy.

Secondly, the U.S. economy has also been resilient, in spite of global tariffs—a fact that we’re seeing turn up in strong quarterly earnings. The vast majority of S&P 500 companies (93%) have reported their first-quarter financial results, with 84% reporting an earnings beat and 81% reporting stronger-than-expected revenue.

And thirdly, the 2026 November midterms could see a major shakeup in Washington, D.C. with Democrats taking back Congress, which is made up of the Senate and House of Representatives.

Some investors also believe the 2026 U.S. midterm elections could lead to policy changes that may improve market sentiment.

Wall Street remains bullish on the S&P 500. Thanks to strong first-quarter earnings, Morgan Stanley raised its 2026-year end target to 8,000 from 7,800. This points to potential upside of seven percent.

Strong consumer spending and demand for data centres forced UBS Global Wealth Management to raise its year end forecast for the S&P 500 as well, to 7,900 from 7,500. This implies upside of 5.7%. To date, the S&P 500 is already up 9.2% and a robust 28% year over year.

While there’s no guarantee that the May to October period will do better than expected, over the last decade, investors who sat on the sidelines during the summer period missed out on some pretty big gains.

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