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 (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 (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%.

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.