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.
S&P 500 Historical Performance Analysis
When the S&P 500, as tracked by the SPDR S&P 500 ETF Trust 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.
Recent Trends
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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