Year to date, the S&P 500 (^GSPC +1.20%) had advanced 10.4% as of Thursday, May 23, 2024. That seemingly arbitrary date was actually the 100th trading day of the year. The S&P 500 returned at least 10% during the first 100 trading days only three other times in the last quarter-century, according to JPMorgan Chase.
So what? Under those circumstances, the S&P 500 has historically performed very well throughout the remaining months of the year. Here's what investors should know.
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Key Data Points
History says the S&P 500 could surge another 15% by the end of 2024
The S&P 500 is widely considered a benchmark for the entire U.S. stock market. Since its inception in 1957, the index has returned at least 10% during the first 100 trading days of the year 18 times. It finished the year even higher 15 times, or 83% of the time, with the only exceptions being 1975, 1983, and 1987.
The chart below shows every year in which the S&P 500 returned at least 10% during the first 100 trading days and the full-year return.
|
Year |
S&P 500 (100-Day Return) |
S&P 500 (Full-Year Return) |
|---|---|---|
|
1961 |
14% |
23% |
|
1963 |
11% |
19% |
|
1967 |
12% |
20% |
|
1975 |
32% |
32% |
|
1976 |
10% |
19% |
|
1983 |
18% |
17% |
|
1985 |
12% |
26% |
|
1986 |
14% |
15% |
|
1987 |
19% |
2% |
|
1989 |
15% |
27% |
|
1991 |
14% |
26% |
|
1995 |
15% |
34% |
|
1996 |
10% |
20% |
|
1997 |
14% |
31% |
|
1998 |
13% |
27% |
|
2013 |
16% |
30% |
|
2019 |
13% |
29% |
|
2021 |
12% |
27% |
|
Average |
N/A |
24% |
|
Median |
N/A |
26% |
Data source: JPMorgan Chase.
As shown above, when the S&P 500 has returned at least 10% during the first 100 trading days, the index has produced average and median returns of 24% and 26%, respectively, for the full year. We can use that information to make an educated guess about how the stock market may perform during the remaining months of 2024.
Specifically, the S&P 500 has advanced about 11% this year. That leaves an implied upside of 13% at the average and 15% at the median. Of course, past returns are never a guarantee of future results, so investors shouldn't lean too heavily on those estimates. Ultimately, whether the stock market goes up or down depends on a variety of macroeconomic and microeconomic factors.
That said, Wall Street analysts also believe the S&P 500 could soar in the coming months. Their reasoning is more fundamentally solid because it deals with anticipated revenue and earnings growth across the index.
Wall Street says the S&P 500 could soar 12.5% over the next year
The bottom-up target for the S&P 500, which is calculated by aggregating every analyst rating on every stock in the index, is currently 5,935, according to FactSet Research. That implies 12.5% upside from its current level of 5,275. Put differently, if every S&P 500 company reaches its median price target, the index will trade at 5,935.
Why are Wall Street analysts so bullish? As a group, S&P 500 companies have reported revenue and earnings growth of 4.2% and 6%, respectively, in the first quarter of 2024. Those figures represent a sequential acceleration from revenue and earnings growth of 4.1% and 4.1%, respectively, in the fourth quarter of 2023.
More importantly, Wall Street analysts expect that acceleration to continue in the coming quarters, such that revenue and earnings growth reach 5% and 11.4%, respectively, for the full year. Analysts also anticipate another acceleration in 2025, such that revenue and earnings growth reach 5.9% and 14.2%, respectively.
As a caveat, those estimates are subject to change as fresh economic data becomes available. Inflation moderated slightly in April, leaving hopes intact that the Federal Reserve will start cutting its benchmark interest rate in September. Rate cuts would stimulate the economy by removing disincentives to consumer spending and business investments.
In that context, rate cuts would be good news for the stock market because robust economic growth should coincide with strong financial performances from companies across the S&P 500, much like Wall Street expects. But policymakers won't reduce rates unless inflation continues to move toward the 2% target. In other words, the forecasts discussed above could change dramatically if inflation falls more slowly than expected.
