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After an excellent first half of the year — with the S&P 500 up 14.5% — investors and traders are now wondering how the U.S. stock market will perform in the second half of 2024.
Moreover, the million-dollar question is whether — after a nearly 60% rally over the past twenty-one months — it’s time to take chips off the table and secure profits.
Ryan Detrick, chief market strategist at Carson Group LLC, has little doubts and advises investors: “Don’t give up on the bull market yet.”
Since 1950, the S&P 500 has posted double-digit returns in the first half of the year 23 times (excluding 2024). Historically, these instances have often led to continued positive performance for the remainder of the year.
When the S&P 500, as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), achieves a year-to-date (YTD) return of more than 10% by mid-year, it tends to perform well in the subsequent months.
On average, the index sees a 1.5% return over the next three months.
Notably, 65.2% of the time, the returns are positive during this period. In contrast, the average return for all years from 1950 to 2023 is only 0.6% over the next three months, with 60.8% of the years showing positive returns.
The contrast becomes more pronounced when examining the performance for the rest of the year. After a strong first half with double-digit gains, the S&P 500 averages a 7.7% return for the remainder of the year, with positive returns occurring 82.6% of the time.
In comparison, the average return — for the rest of the year across all years — is just 4.8%, with a positive return frequency of 71.6%.
The full-year performance in years when the S&P 500 posts a greater than 10% return by mid-year is particularly striking. The average full-year return in such instances is 25.1%, with the index delivering positive returns 100% of the time.
This is significantly higher than the average full-year return of 9.3% in typical years, where the positive return rate stands at 71.6%. This stark difference highlights the exceptional performance of the S&P 500 in years that start strong.
In recent years, similar patterns have been observed. For instance, in 2023, the S&P 500 recorded a 15.9% YTD return by mid-year. Although the following three months saw a slight dip of -3.6%, the historical data suggests potential for recovery and growth in the remaining months.
The years 2019 and 2021 also serve as examples where the S&P 500 continued to perform well in the second half after a strong mid-year performance. In 2019, the rest of the year saw a 9.8% gain, and in 2021, the index grew by 7.2% in the latter half.
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Posted In: SPY
