As summer heats up, so does the stock market, with the S&P 500 potentially on a path to reach 5,600 during a summer rally, according to a Wall Street analyst. Historical data shows that the market tends to kick off summer with a solid performance in early June, setting a bullish tone that carries through the summer months.
Bank of America’s analysis dating back to 1928 reveals that the last 10 sessions of June have historically been lackluster, with the S&P 500 up only 48% of the time and an average return of just 0.02%. However, this pause can set the stage for the strongest 10-day period of the year in early July, with average returns of 1.54%.
During presidential election years, the market’s behavior is even more pronounced, with July and August typically yielding positive returns. The first 10 days of August are particularly strong, with the S&P 500 averaging a 1.53% gain, potentially leading to new all-time highs in the 5600 range.
The overperformance of mega caps relative to large caps is another key trend highlighted by Bank of America, with the S&P 100 rallying 20% year to date, outpacing the S&P 500’s performance by 4 percentage points. This bullish pattern suggests a potential late “1990s-style leadership melt-up” for mega caps compared to large caps.
Overall, the summer rally for the stock market looks promising, with historical data pointing towards a potential surge in early July and the S&P 500 potentially reaching new highs in the 5600 range. Investors will be keeping a close eye on market trends to capitalize on potential opportunities during this sizzling moment for stocks.
