Stock Market's 'Frightful Yet Fulfilling' Q1 Performance: What Does It Mean For The Rest Of 2024?

The stock market’s robust performance in the first quarter of 2024 has investors on edge, with experts predicting a potentially “frightful yet fulfilling” year-end.

What Happened: The S&P 500 is on course for a nearly 10% price gain in the first quarter, with a staggering 30% rally from its Oct. 27 low, reported MarketWatch on Monday. This remarkable start has prompted investors and strategists to consider potential warning signs and protective measures against an anticipated market correction.

Citing data from 1970, analysts at Jefferies observed that such strong beginnings often indicate a continuation of the rally. The S&P 500 has historically shown an average first-quarter gain of 2.5%. When the index outperforms this, the second quarter typically surpasses its average gain of around 2.6% by 60 basis points or 0.6 percentage points. The S&P 500 also tends to be up around 69% of the time in this scenario, compared to an average of around 64%.

According to Jefferies, when the S&P 500 records a return of over 10% in the first quarter, it leads to an even greater boost in the following three months. They mentioned that the second quarter typically sees an average gain of 3.3%, with an increase occurring 78% of the time.

However, the second half of the year tends to decline in performance after a strong start, with the third quarter experiencing a 1% fall compared to an average “flattish” performance. Fourth-quarter performance, meanwhile, has only slightly exceeded its long-term average in years with a strong first-quarter performance.

Sam Stovall, Chief Investment Strategist at CFRA, aligns with the report, noting that strong Q1 performances usually lead to stronger Q2 performances and substantial full-year gains. However, he cautioned that the journey might be more turbulent than usual, with the potential for significant pullbacks.

“So, in other words, this strong start implies a frightful yet fulfilling full-year performance for the S&P 500,” Stovall said.

See Also: Latest Solana Meme Coin Skyrockets Tens Of Thousands Of Percent In Just 10 Days

Why It Matters: The stock market’s strong start comes amid recession fears and warnings of a potential 60% market crash. Veteran technical analyst Milton Berg had previously cautioned about a possible 60% decline in the S&P 500, citing concerns of an imminent recession. This warning was issued on March 7, 2024.

However, Federal Reserve Chair Jerome Powell hinted at possible interest rate cuts in 2024, citing the uncertain economic outlook and the need for cautious movement. This was on March 6, 2024.

Moreover, the stock market has been facing conditions that rank among the worst in history, as warned by veteran investor John Hussman. Hussman had cautioned investors of another potential market fallout due to the current "Cluster of Woe." This warning was issued on February 5, 2024.

Additionally, Apollo’s Chief Economist, Torsten Sløk, had sounded the alarm on the AI bubble, warning that it’s “bigger than the 1990s tech bubble.”

Read Next: Book Of Meme Chases ‘Dogecoin Killer’ Shiba Inu In Trading Volumes: ‘Bullish Ride Ahead’ Says Crypto Tech

Image Via Shutterstock