Six more months! Six more months!
Investors cheered as stocks ended the second quarter last Friday up 4.3%. . . and 15.3% for the first six months of 2024. That’s the best first-half performance during an election year on record. We also saw the second-largest quarterly outperformance of growth stocks (9.6%) over value shares (-2.1%) in the last 30 years, driven largely by AI-themed mega-caps.
You already know that July is a hot month for stocks, historically. But what might the second half of the year have in store for investors?
Since 1995, there have been nine instances where the S&P 500 has gained more than 10% during the first half of the year. Here’s what happened next:
- Stocks rose another 10.6% on average from July through December
- Stocks delivered positive second-half returns 100% of the time (9 out of the 9 instances)
Second Half S&P 500 Returns Following a 10% Gain During the First and Second Quarter
Source: Bloomberg, calculations by Horizon Investments, as of June 28, 2024. Indices are unmanaged and do not have fees or expense charges, both of which would lower returns. It is not possible to invest directly in an index.
The upshot: Based on history, there’s a good chance stocks will end 2024 higher than where they stand today. Indeed, over the past 35 years, buying stocks when the market hits a new high has worked out better on average for investors when they’re investing on days picked at random. If the interest rate environment moves lower in the coming months—core PCE inflation slowed to 2.6% in May—it could provide an additional boost to equity prices.
Of course, the future is unknown. But clients with cash on the sidelines may want to consider paying attention to what history has to say about the stock market’s possible path between now and December.
The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. Information obtained from third party sources is believed reliable but has not been vetted by the firm or its personnel.
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