The S&P 500 is heading into what is historically one of the most favorable times of the year for returns. Investors are closely monitoring earnings from major tech companies to gauge future market directions after a recent oil slump. In Asia-Pacific markets, stocks rose 0.7% for a second day.
The region’s jobless rate decreased to 2.4% in September from 2.5% the previous month. Japan’s ruling Liberal Democratic Party lost its majority in Monday’s lower house election, creating uncertainty about the new coalition government and Prime Minister Shigeru Ishiba’s position. Next year is expected to see more Chinese IPOs in the U.S. and Hong Kong, following high-profile listings like autonomous driving company WeRide’s Nasdaq debut and CR Beverage’s Hong Kong listing.
Analysts cite heightened investor sentiment, lower interest rates, and fewer regulatory hurdles as reasons for this trend. HSBC announced a $3 billion share buyback program, bringing the year’s total to $9 billion. The bank’s pre-tax profit rose 10% and quarterly revenue increased 5%, despite a 24 basis point fall in net interest margin.
Market strategists caution that Japan’s Nikkei 225 rise after Monday’s election may not signal a long-term trend. Analysts are watching market reactions as the political landscape stabilizes. November has historically been a strong month for stocks, especially the S&P 500.
Data shows the S&P 500’s average November returns have been the highest of any month since 1950, including the past 10 years and election years. The S&P’s 22.1% year-to-date gain further supports this trend. Chief Equity Technical Strategist Stephen Suttmeier notes that when the S&P 500 is up year-to-date through October, it typically continues rising 79% of the time in November-December.
While year-end often brings strong market performance, investors should remain cautious about long-term prospects. Trends can shift, and stock market gains are never guaranteed.
S&P 500’s promising phase begins
More Wall Street investors and strategists are forecasting the S&P 500 index could reach 6,000 by 2024’s year-end. However, the upcoming election and the Federal Reserve’s interest rate strategy could impact this projection. CFRA Research chief investment strategist Sam Stovall believes election enthusiasm could drive the index above 6,000.
“When you look at what typically happens in the final two months of an election year, the S&P gains about 3%,” Stovall states. Stovall cautions that focus would then shift to the Federal Reserve and its interest rate decisions. “When it comes to rate cuts, wanting is more profitable than having,” he explains, noting that the S&P 500 has historically gained more when the Fed signals an upcoming rate cut than when the actual cut is implemented.
If the economy remains “fairly strong with a very resilient employment picture,” Stovall says the Fed may choose to “sit on its hands” at its upcoming November or December meetings rather than cut rates as widely anticipated. “We still think they’re gonna cut twice, but the uncertainty is out there,” he adds. November marks the start of what is typically the most rewarding six-month period for U.S. stock markets, especially for large-cap and small-cap stocks.
The months from November to April have historically delivered the highest returns for the S&P 500 and Russell 2000 indices, according to CFRA market research. Experienced traders and analysts pay close attention to November as it signals the start of this advantageous cycle. This trend can be appealing to investors looking to optimize their portfolios by capitalizing on historical market patterns.
As we move into this promising phase, it is an opportune moment for investors to reassess their strategies and take advantage of the historical market trends that have characterized this period as the best six months for U.S. stocks. Market experts emphasize that while past performance does not guarantee future results, the historical data provides a strong basis for considering this strategy. Investors are encouraged to evaluate their individual financial situations and consult with financial advisors to determine the best approach to capitalize on these market trends.
Understanding these patterns can help in planning a diversified and resilient portfolio, setting the stage for potential growth during the upcoming months. As November commences, it brings forth a period that, historically, has proven fruitful for large-cap and small-cap stocks. Investors may want to leverage this time to seek profitable opportunities in the U.S. stock market.
