New York, United States – As we enter the second half of 2024, the stock market has shown impressive gains, with the S&P 500 and Nasdaq Composite both posting significant increases. Despite potential concerns, historical data suggests that this bullish trend may continue through July and beyond.
In the past, July has been a favorable month for stocks, especially for the Nasdaq, which has seen gains in 10 out of the last 11 years. Looking back at historical data since 1928, years when the S&P 500 saw a 10% or more increase in the first half of the year went on to post an average gain of 24% by year-end.
Interestingly, strong starts to the year have typically been followed by positive performance in the second half, with the majority of years since 1988 closing higher. Overall, the second and third quarters have shown consistent growth, with an average increase of 6.1% and a 76% success rate.
However, not all second halves of the year have been positive, as evidenced by the market crashes of 1929 and 1987. These events led to significant declines in the latter part of those years. While July tends to see decent returns on average, the likelihood of positive outcomes drops compared to the previous month.
August typically shows modest gains, but September and October can be challenging months for stocks. Nevertheless, November often marks the beginning of a strong finish to the year, setting the stage for the Santa Claus rally in December.
While historical data can provide insights into market trends, unforeseen events can quickly change the trajectory of the market. Despite this, stock seasonality studies have proven to be reliable during this bull market, offering investors valuable information as they navigate through uncertain times.
In a separate study, Bank of America found that the beginning of July historically has the highest average returns compared to other periods throughout the year, adding another layer of analysis for investors to consider. With these factors in mind, investors may anticipate further strength in the market in the coming weeks before traditional market patterns take precedence.
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