U.S. stocks could rise another 10% by the end of 2024 after a strong first half, history shows

U.S. stocks could rise another 10% by the end of 2024 after a strong first half, history shows

The U.S. stock market just scored a gangbusters first half of the year. If history is a guide, Wall street could be in for another robust six months, according to Comerica Wealth Management.

The S&P 500 index up nearly 15% in the first six months of 2024, set a new record close for the first time in more than two years in January and since then has achieved 31 fresh all-time highs, a pace that equates to a new record close on roughly one of every three trading days, said a team of Comerica analysts led by John Lynch, chief investment officer.

The large-cap benchmark index also booked one of its best starts to the year ever. Its nearly 15% return through the end of June ranks as the 13th best start for the S&P 500 since 1950.

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History suggests that fast opening halves of the year generally maintain their momentum through the second half, Lynch and his team said in a Monday note.

Since 1990, there have been only 10 occasions where the S&P 500 has achieved a return greater than 10% in the first half of a year. In each instance, the large-cap benchmark index booked a positive return in the second half of the year, averaging a 10.8% return over the next six months and a 14.2% advance over the next 12 months, according to data compiled by Comerica (see chart below).

Meanwhile, presidential election years, particularly those where the incumbent president is running for re-election, also provide tailwinds for the stock market, the analysts said. “Re-election years usually benefit from fiscal stimulus, which provides a cushion for equity markets.”

Indeed, the S&P 500 has gained in every presidential re-election year since 1944 (see chart below), but this year’s performance would still “stand out” because stocks “are not usually strong” in the early parts of election years, said Lynch and his team.

“It’s typically the second half of the year that produces the strongest gains,” they wrote.

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U.S. stocks were mostly higher in midday trading on Tuesday after Federal Reserve Chair Jerome Powel acknowledged the disinflationary trend in the economy appeared to be resuming, but also said it was still too soon for the central bank to make a move on interest rates.

The S&P 500 was wavering between gains and losses, while the Nasdaq Composite was up 0.4% and the Dow Jones Industrial Average was nearly flat, according to FactSet data.

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