Another Month of Positives
The major trends are favorable for investors, traders, and speculators.
It ended on a bit of a bummer, but June was a pretty good month. And wait till you see July’s recent track record.Though it was down 0.41 percent on Friday – and that decline qualified it as the worst single day of the month – the S&P 500 finished June up 3.47 percent.
The index has been positive in five out of six months so far in 2024, and its 14.48 percent year-to-date gain bodes well for the balance of the year.
As Ryan Detrick of Carson Group illustrated on X last week, when the S&P 500 is up double-digits for the first half it’s never been lower for the full year.
So, based on history and data, we should not expect (but we should always be prepared for) a big selloff in the back half of the year.
In fact, the S&P is up an average of 7.7 percent in the second half following a double-digit first half, and it does better than that 83 percent of the time.
Here’s the bottom line: The S&P 500 is up an average of 25.1 percent for the full year when it posts a double-digit gain during the first half of the year.
Here’s something else: Over the last 20 years, July has been the best month for stocks.
The S&P 500 has been up nine years in a row and 11 of the past 12 years. Over the past 10 years July is the second-best month for the market, trailing November.
Over the past 20 years it’s been the best month, with an average gain of 2.3 percent.
That’s against flat prices month over month and a 0.1 percent rise in the core Personal Consumption Expenditures Price Index.
Both PCE and core PCE were up 2.6 percent year over year.
More and more incoming data suggest inflation is trending toward the Federal Reserve’s 2 percent target.
And more and more observers are wondering whether the Fed is waiting too long for confirmation.
The concern is that the labor market is already deteriorating, with the possibility that the unemployment rate will head substantially higher from here.
It’s important to appreciate the fact that we are still talking about a historically low 4 percent rate. But what’s the point of letting it rise much higher than that if it’s not necessary.
We’ll hear from Chair Jerome Powell on the Fed’s current disposition on Tuesday at 9:30 a.m. ET.
Initial jobless claims data will come out a day early, on Wednesday, owing to the Independence Day holiday in the US.
And, given the equities in play, we’re particularly intrigued by Friday’s release of employment data for June.
Catalysts for July upside for the S&P 500 include second-quarter earnings season as well as more data that gives our central bankers confidence to cut.
