Looking at historical data, the stock market is poised to rise further given how strong it has been so far. It also bodes well that this is an election year. The S&P 500 is up more than 15% year to date, as the artificial intelligence boom has boosted mega-cap tech stocks and investors are hopeful that the Federal Reserve will start cutting interest rates later this year. All sectors that make up the index, except for real estate, are expected to finish the first half of the year in the positive. History offers reasons to be optimistic about the future, according to data analyzed by Sam Stovall of CFRA Research. From 1945 to 2023, whenever the first half of the year was positive for the S&P 500, the second half of the year produced an average gain of 5.3%. In more than three of the four years that ended with a positive first half, the overall index rose in the second half. Even better, the fact that the S&P 500 has performed so well this year makes the outlook even brighter. In years in which the S&P 500 rose at least 10% in the first half of the year, the index typically rose 7.9% in the second half of the year. In more than four of five of these years, the index was positive in the second half of the year. Stovall’s data shows that presidential election years also tend to produce returns in the second half of the year. Looking at all election years since World War II, the S&P 500 has, on average, risen 0.9% and 2.4% in the third and fourth quarters, respectively. For the second half of the year as a whole, the S&P 500 has risen an average of 3.5%. The picture is even brighter in presidential election years in which the first half is won. In these instances, the S&P 500 has, on average, risen 1% in the third quarter and 3.8% in the fourth quarter, resulting in a first half of the year as a whole of 4.9%. Some investors are wondering how much higher the S&P 500 can go after hitting a record high this year. The median forecast of market strategists suggests the index will finish 2024 up less than 1% from Thursday’s closing price, according to an exclusive CNBC Pro survey.
