The S&P 500’s robust start to 2024 has sparked optimism among investors, hinting at potential continued gains based on historical patterns. Traditionally, the performance of the stock market after Memorial Day has been mixed. Before 1996, markets typically performed well during this period. However, since 1996, the Dow Jones Industrial Average has only managed an average return of 0.05% during the post-Memorial Day timeframe. In contrast, the S&P 500 and Nasdaq have fared better, with average returns of 0.31% and 0.88%, respectively.
One bullish indicator for the remainder of the year is the S&P 500’s milestone of crossing its 100th trading day for 2024 with a notable rise. Historically, when the S&P 500 has risen in the first 100 days, it tends to continue its upward trajectory for the rest of the year. This pattern has held true in 17 out of the last 20 years, with an average gain of 8.8%. Encouragingly, the S&P 500 has already climbed 11.3% so far this year, suggesting a potential continuation of this positive trend.
Investor sentiment remains high, with allocations to US stocks at record levels. This confidence is mirrored in bullish sentiment, which has risen to 47%, above the historical average of 37.5%, according to the American Association of Individual Investors (AAII). Conversely, bearish sentiment is at 26.3%, below its historical average of 31%.
The market has also witnessed some unexpected developments in specific sectors. Notably, three of the top five gainers in the S&P 500 for 2024 are utilities companies: Super Micro Computer (NASDAQ
), Vistra Energy Corp (NYSE
), and Constellation Energy Corp (NASDAQ
). This surge underscores the dynamic nature of the market and highlights the potential for growth in areas that may not typically attract significant attention.
On a broader scale, U.S. companies are rewarding investors with record-breaking dividend payouts. In the first quarter of 2024, dividends reached $164.3 billion, a 7% increase from the same period last year. This trend is also reflected globally, with total dividends hitting a new high of $339.2 billion. However, Walgreens (NASDAQ
) stands out as an exception, having recently cut its quarterly dividend by nearly half. This decision has significantly contributed to the stock’s 40% downturn so far in 2024, illustrating the potential consequences of such moves on a company’s performance.
For investors looking to capitalize on these market opportunities, InvestingPro offers tools and insights to help navigate the financial landscape. With an InvestingPro subscription, investors gain access to AI-managed portfolios, simplified financial data through ProTips, an advanced stock finder, and comprehensive historical financial data. This can empower investors to make informed decisions and potentially enhance their investment strategies.
In conclusion, while historical patterns suggest that the S&P 500’s strong start could lead to further gains in 2024, investors should remain mindful of the mixed results in the post-Memorial Day period and the dynamic nature of market sectors. By leveraging tools like InvestingPro, investors can stay informed and strategically positioned to take advantage of market opportunities.