The S&P 500 is already up 15% in 2024, but history says the index could rise another 10% before the year is out.
He S&P 500 (^GSPC 0.25%) has risen in 2024, recording its second best performance in the first quarter of the last decade. And it advanced more than 10% during the first 100 days of trading, something it has done only three times in the last quarter century and only 18 times since its inception in 1957.
If we look at the 18 years in which the S&P 500 rose at least 10% during the first 100 days of trading, a relatively accurate stock indicator emerges. Specifically, after those strong starts, the index rose even further during the remaining months of the year 15 out of 18 times, meaning the indicator was 83% accurate.
Here's what investors need to know.
History says the stock market will rise about 10% in 2024
He S&P 500 It covers approximately 80% of US stocks by market capitalization, and the index comprises value stocks and growth stocks from all countries. market sector. Those qualities make the S&P 500 an excellent benchmark for the broader U.S. stock market.
The chart below lists the years in which the S&P 500 returned at least 10% during the first 100 days of trading. It also shows how the index performed during the rest of each year.
|
Year |
S&P 500 (100-day performance) |
S&P 500 (full year performance) |
|---|---|---|
|
1961 |
14% |
23% |
|
1963 |
eleven% |
19% |
|
1967 |
12% |
twenty% |
|
1975 |
32% |
32% |
|
1976 |
10% |
19% |
|
1983 |
18% |
17% |
|
1985 |
12% |
26% |
|
1986 |
14% |
fifteen% |
|
1987 |
19% |
2% |
|
1989 |
fifteen% |
27% |
|
1991 |
14% |
26% |
|
nineteen ninety five |
fifteen% |
3. 4% |
|
nineteen ninety six |
10% |
twenty% |
|
1997 |
14% |
31% |
|
1998 |
13% |
27% |
|
2013 |
sixteen% |
30% |
|
2019 |
13% |
29% |
|
2021 |
12% |
27% |
|
Average |
N/A |
24% |
|
Median |
N/A |
26% |
Data source: JPMorgan Chase.
As shown in the chart, when the S&P 500 has advanced at least 10% during the first 100 trading days of a given year, the index has returned an average of 24% and a median of 26% for the entire year. Past performance is never a guarantee of future returns, but we can use that information to make an educated guess about the coming months.
Specifically, the S&P 500 has advanced 15% so far this year. That leaves an implicit increase of 9% on average and 11% on the median. In other words, history says the S&P 500 will return around 10% over the remaining months of 2024.
Stock market performance depends on inflation and interest rates
The performance of the S&P 500 during the rest of the year depends largely on inflation and interest rates. Specifically, if inflation moderates and the Federal Reserve reduces its reference interest rateStocks could rise as lower borrowing costs drive economic expansion and strong corporate profits.
Alternatively, if inflation remains elevated and the Federal Reserve leaves its benchmark interest rate at its current level (the highest level in two decades), stocks could decline as higher borrowing costs slow economic expansion and corporate profit growth.
Reading cheap tea leaves is a challenge right now. The US economy expanded at an annualized rate of 1.3% in the first quarter, well below the consensus estimate of 2.5%. Weak economic growth could accelerate rate cuts. However, the US economy added 272,000 jobs in May, crushing the consensus estimate of 185,000. And inflation hit 3.4% in May, firmly above the Federal Reserve's 2% target. Strong hiring and persistent inflation could delay rate cuts.
Wall Street analysts have mixed expectations for the stock market
The average price target for each S&P 500 stock can be aggregated into an upward target for the entire index. The term "bottom-up" simply means that the target was constructed by analyzing individual components of the S&P 500 rather than broad economic factors. The S&P 500 currently has an upward price target of 5,925, implying an 8% upside from its current level of 5,485.
However, opinions on the stock market vary widely among individual analysts. For example, Juliรกn Emanuel in evercore He recently raised his year-end target for the S&P 500 to 6,000, implying an increase of more than 9%. But Marko Kolanovic in J.Morgan has set the S&P 500 with a year-end target of 4,200, implying a drop of 23%.
Here's the bottom line: History says the S&P 500 could advance about 10% by the end of the year, and the upside target more or less supports that conclusion. But investors should not be lulled into a false sense of security. Economic signals are mixed, with at least one Wall Street analyst expecting the S&P 500 to fall sharply in the remaining months of the year.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool holds and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
