Investors are off to a good start in 2024 — at least based on how the S&P 500 is performing. The widely followed index jumped nearly 15% in the first half of the year.
The momentum in 2023 for several megacap stocks has continued into 2024, pushing the S&P 500 to new all-time highs. Five of the so-called “Magnificent Seven” stocks are up by double-digit percentages.
What’s next for the S&P 500? Here’s what history says it could do in the second half of the year.
Image source: Getty Images.
Looking back
Four decades of S&P 500 performance reveals that the index is likely to rise in the second half of a year, regardless of its gain or loss in the first half. Since 1984, the S&P 500 has fallen during the latter half in only 11 out of 40 years.
| Year | 1st Half | 2nd Half | Year | 1st Half | 2nd Half | Year | 1st Half | 2nd Half |
|---|---|---|---|---|---|---|---|---|
| 1984 | (7.12%) | 9.18% | 1998 | 16.84% | 7.02% | 2012 | 8.31% | 4.7% |
| 1985 | 14.72% | 9.8% | 1999 | 11.67% | 6.39% | 2013 | 12.63% | 14.45% |
| 1986 | 18.72% | (3.92%) | 2000 | (1%) | (9.23%) | 2014 | 6.05% | 4.34% |
| 1987 | 25.53% | (18.44%) | 2001 | (7.26%) | (6.23%) | 2015 | 0.2% | (1.61%) |
| 1988 | 10.69% | 2.19% | 2002 | (13.79%) | (9.17%) | 2016 | 2.69% | 6.46% |
| 1989 | 14.5% | 11.14% | 2003 | 10.76% | 13.19% | 2017 | 8.24% | 10.32% |
| 1990 | 1.31% | (7.76%) | 2004 | 2.6% | 7.35% | 2018 | 1.67% | (7.78%) |
| 1991 | 12.4% | 10.36% | 2005 | (1.7%) | 4.51% | 2019 | 17.35% | 8.99% |
| 1992 | (2.15%) | 5.53% | 2006 | 1.76% | 11.66% | 2020 | (4.04%) | 20.55% |
| 1993 | 3.4% | 3.88% | 2007 | 6% | (2.33%) | 2021 | 14.41% | 10.33% |
| 1994 | (4.76%) | 2.93% | 2008 | (12.83%) | (29.7%) | 2022 | (20.58%) | 0.37% |
| 1995 | 18.61% | 13.07% | 2009 | 1.78% | 20.77% | 2023 | 15.91% | 7.18% |
| 1996 | 8.88% | 9.6% | 2010 | (7.57%) | 22.41% | |||
| 1997 | 19.49% | 8.91% | 2011 | 5.01% | (6.13%) |
Data source: YCharts. Table by author.
The major index rose in the first half of the year 28 times since 1984. It delivered positive gains in the second half of the year 21 times, compared to seven times when it declined.
What about when the S&P 500 increased by a double-digit percentage in the first half of the year, as it has done in 2024? That’s happened 15 times over the last four decades. In 13 of those years, the S&P 500 also rose in the second half of the year. It delivered another double-digit gain in seven of the 13 years.
The S&P 500 rose close to 15% in the first half of the year (as it did in 2024) four times — in 1985, 1989, 2021, and 2023. It kept moving higher in each case, with a double-digit gain in two of the years.
The presidential election year twist
2024 is a U.S. presidential election year. Such election years tend to be positive for the stock market. Since 1984, the S&P 500 has risen six out of eight times during years when a U.S. presidential election was held.
This trend extends back even further. Going back to 1928, there have been 24 U.S. presidential elections. The S&P 500 rose in 20 of those years.
But how has the index performed in the second half of the year, when a U.S. presidential election was held? Usually, quite well.
Over the last four decades, the S&P 500 has delivered a positive return in the second half of the year during eight presidential election years, compared to only two times when it fell. In those two outliers, the index declined during the first half of the year.
Will history repeat itself?
The overarching trend is that the S&P 500 moves higher during the second half of the year. This is true whether the index delivered a positive return in the first half of the year. However, the S&P nearly always continues to rise in the second half of the year when it had a double-digit gain in the first half.
Will history repeat itself? Maybe, but there’s no guarantee. The current overall macroeconomic environment matters a lot more for the S&P 500 than how it has performed in the past.
There’s good news on that front, though: The U.S. economy appears to be relatively strong. Unemployment is low. Inflation seems to be moderating. Such a climate is usually favorable for stocks. At this point, it seems more likely than not that the S&P 500 will deliver a positive gain in the second half of 2024.