S&P 500 Summer Trends: How historical seasonality could support the S&P 5...

• Historically, the S&P 500 has shown affirmative seasonality successful July, with an mean summation of 2.3% implicit the past 20 years.
• Election years typically spot a summertime rally, followed by a dip earlier the election, and a post-election rally.
• Even with beardown first-half performance, the S&P 500 has seldom seen antagonistic returns successful the 2nd half. Will the rally continue?
• While past show doesn’t warrant aboriginal results, humanities trends tin beryllium invaluable for investors.

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S&P 500 Performance successful H1 2024 – Comparisons to the “Dotcom Bubble”?

The S&P 500 has experienced a stellar year-to-date performance, driven by a beardown request for AI-related investments. This enthusiasm has propelled the ‘Magnificent 7’ and respective different AI-associated stocks to important gains, culminating successful an approximate 14.4% summation successful the S&P 500 scale by the extremity of June 2024.

The scale has been bolstered by a robust US system and awesome net reports from US-listed companies, propelling it to grounds highs. To supply immoderate context, the S&P 500 surged astir 58% from its October 2022 lows to its June 2024 highs.

S&P 500 Top 10 Performers of 2024

Source: LSEG (click to enlarge)

There is increasing speculation among marketplace participants, drafting comparisons betwixt the existent optimism astir AI and the dotcom bubble of implicit 20 years ago. Many are referencing the “Four Horsemen” of the precocious 1990s: Cisco, Dell, Microsoft, and Intel. In particular, Cisco (CSCO) is often compared to the emergence of AI chipmaker Nvidia (NVDA). Cisco’s banal surged 4500% successful the 5 years starring up to its highest successful 2000, a communicative akin to Nvidia’s caller ascension.

Despite the excitement, uncertainty astir AI’s aboriginal persists, causing immoderate marketplace participants to fearfulness a repetition of the aboriginal 2000s dotcom bubble burst. However, it’s important to enactment the important differences betwixt the 2 periods, astir notably that today’s starring tech companies are successful a overmuch stronger fiscal presumption than their dotcom-era counterparts.

This statement is apt to proceed for immoderate time. Meanwhile, I would similar to analyse the seasonality and humanities show of the S&P 500 during the summertime months, predetermination years and a fewer different points of humanities data. This information could service arsenic a invaluable instrumentality for anticipating marketplace trends starring up to the upcoming US Presidential Elections.

Historical Trends: How Seasonal Patterns Influence the S&P 500

The second fractional of 2024 is poised to beryllium important for the fiscal markets, with cardinal slope policies and planetary elections expected to play important roles. Let america analyse humanities trends during U.S. predetermination years and research the seasonal patterns that power the S&P 500.

Stock marketplace seasonality refers to the predictable patterns oregon trends that hap astatine circumstantial times of the year, often influenced by recurring events, capitalist behavior, and economical cycles. These patterns tin assistance marketplace participants expect imaginable marketplace movements based connected humanities data. 

Seasonality has provided a favorable boost for U.S. stocks successful July, with the S&P 500 averaging a 2.3% summation during this period implicit the past 20 years. This makes July the champion performing period connected mean implicit the past 20 years arsenic well. 

S&P 500 Performance Month-by-Month Since 1950

Source: Carson Investment Research, Isabelnet (click to enlarge)

The adjacent illustration examines the show of the S&P 500 during U.S. Presidential Election years. Historical information from these years erstwhile again indicates a affirmative inclination for July. Typically, predetermination years grounds a lackluster show from January to May, followed by a summertime rally that lasts until the extremity of August. This is usually followed by a dip successful September and October starring up to the election, earlier a post-election rally that aligns with the “Santa Rally” heading into Christmas.

S& P500 Performance During Election Years, Monthly Returns and Percentage of Time Up – Since 1928

Source: BofA Research, Bloomberg and Isabelnet (click to enlarge)

Considering the singular show truthful acold successful 2024, I judge the last illustration is peculiarly relevant. The illustration beneath illustrates the humanities show of the S&P 500 successful years wherever gains exceeded 10% during the archetypal six months. 

Concerns person arisen that the important gains successful the archetypal fractional of the twelvemonth whitethorn pb to a important correction successful the 2nd fractional of 2024. However, information since 1950 shows that erstwhile the S&P 500 has accrued by much than 10% successful the archetypal six months, determination were lone 4 instances wherever the consequent six months resulted successful antagonistic performance

S&P 500 Performance When H1 Delivered Gains Greater than 10%

Source: Carson Research, Factset, Isabelnet (click to enlarge)

Looking astatine the batch humanities information provided supra and seasonality whitethorn good assistance support the S&P 500 elevated successful the 2nd fractional of 2024. Of people past show is nary warrant connected aboriginal returns but seasonality and humanities show tin inactive beryllium a important instrumentality for marketplace participants.

There are of people unsocial factors this twelvemonth successful examination to galore others, i.e. geopolitical tension, uncertainty astir monetary argumentation and demand/supply dynamics moving forward. All of these are somewhat unsocial to the existent rhythm but that does not mean that humanities information cannot overgarment america a picture.  

Forget the hype and the doom and gloom, usage the accusation provided present to summation insights and assistance you successful making omniscient trading decisions arsenic the twelvemonth progresses. 

For a afloat Technical Analysis Outlook, Read More: Markets Weekly Outlook: French, UK Elections successful Focus Followed by NFP Data

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