- According to Goldman Sachs, the stock market is approaching its strongest period of the year.
- The bank highlighted that the Nasdaq 100 Index recorded its 16th consecutive positive July month.
- “These statistics are staggering for NDX,” Goldman Sachs said.
The stock market’s best days and weeks of the year are approaching.
According to Goldman Sachs, if history is any guide, the S&P 500 could rise 4% next month to a record high.
The bank said in a note this month that since 1928, the best days of the year have typically occurred in the first two weeks of July.
“Since 1928, July 3rd has had the highest daily percentage of positive returns for the S&P (72.41%), followed by July 1st (72.06%) and the other statistically significant trading days during the first two weeks of July,” said Scott Rabner, managing director at Goldman Sachs.
On July 3rd, the average daily gain for the S&P 500 was 0.49%, and on July 1st it was 0.36%. Also, from July 1st to July 17th, the average decline was only two days: -0.07% on July 7th and -0.01% on July 16th.
“The first 15 days of July were the best two-week trading period since 1928,” Rubner said.
For the S&P 500, the best two weeks of the year are in July. Goldman Sachs
Additionally, recent market trends show that the stock market was incredibly bullish in July as a whole.
“NDX’s statistics over the past 16 years are astounding,” Lubner said of the Nasdaq 100 index. “The NDX recorded its 16th consecutive positive year in July, with an average return of 4.64%.”
Meanwhile, the S&P 500 had nine consecutive positive days in July, delivering an average return of 3.66%.
If similar seasonal trends continue this year, based on current levels, the S&P 500 would rise nearly 4% to a new record of 5,665.
As for what could lead to even more bullish returns in the coming weeks, Rubner highlighted the fact that a record $7 trillion-plus in cash has been accumulated in money market funds and could soon be flooding the market.
Additionally, with quarter-end and second-half rebalancing schedules beginning in early July, passive equity allocations could drive inflows into equities.
“The new quarter (Q3) and half (Q2) are times when money really starts to flow into the stock market,” Rubner said.
