Volatile times

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   By Guest Blogger Ryan Lewenza

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We expect continued market volatility in the coming months, which is why we are maintaining a higher-than-normal cash balance and continue to emphasize the importance of a balanced and diversified portfolio.

The first major source of uncertainty is the ongoing conflict and fragile ceasefire between the U.S. and Iran. While both sides, particularly President Trump and the U.S. administration, appear to want an off-ramp and an eventual end to the conflict, each country remains firmly entrenched in its demands.

The U.S. is pushing for a deal that addresses Iran’s uranium enrichment and nuclear program, as well as the reopening of the Strait of Hormuz. Iran, meanwhile, is seeking security guarantees, war reparations and sanctions relief, along with the ability to continue enriching uranium, which it views as a fundamental right.

Although a ceasefire was announced, it has already shown signs of strain. Last week Iran reportedly attacked several ships in the Strait of Hormuz and launched missile and drone strikes targeting oil infrastructure in the UAE. In response, the U.S. outlined a new strategy to guide trapped vessels through the strait; however, without a meaningful naval presence, there are clear limitations to what can be done.

At this point, we appear to be in a game of chicken as markets wait to see which side blinks first. In the U.S., Trump is facing a lot of pressure from the high gasoline prices and low approval ratings on the war, while Iran’s economy is on life support, especially with the current U.S. blockade which is limiting Iranian oil sales it badly needs. In our view, equity markets may be too complacent about the durability of the ceasefire, and a renewed escalation could trigger additional bouts of volatility.

The second factor is seasonality. We are now entering a historically weaker period for equity markets. From a seasonal standpoint, the May-October window has tended to produce lower returns and higher volatility, giving rise to the well-known adage, “Sell in May and go away.”

S&P 500 monthly performance

Source: Bloomberg, Turner Investments

That said, the saying may need a modern update. Over the past 13 years, May has actually been a strong month, with the S&P 500 posting gains in 12 of those years. A more fitting expression might be, “Sell in June and go away.”

Even so, the broader seasonal pattern remains intact. September has consistently been the weakest month of the year for equities, and this dynamic increases the likelihood of heightened market swings through the summer and into early fall.

Finally, we are approaching the U.S. midterm elections, which have historically been associated with equity market weakness in the lead-up to November. Our analysis of midterm election years shows that the S&P 500 has declined by an average of 2.5% in the second quarter and 1% in the third quarter, typically followed by a strong rally in the fourth quarter.

The question now is whether we could see a similar pattern unfold this year.

S&P 500 quarterly performance in mid-term election years

Source: Bloomberg, Turner Investments

Taken together, these factors reinforce our cautious stance on equity markets in the near term. Over the longer term, provided oil prices do not surge to $150 per barrel as a result of the Iran/U.S. conflict, the U.S. and global economies should continue to expand, and equities could move higher, supported by the strong corporate profits we are seeing from large U.S. companies.

However, it could be a bumpy couple of months ahead. Buckle up!

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Investment Advisor, Private Client Group, of Raymond James Ltd.

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Source: https://www.greaterfool.ca/2026/05/16/volatile-times/