What Does A Big First 6 Months Mean For Stocks?

After the worst fourth quarter since the Financial Crisis and worst December since the Great Depression, stocks have come roaring back. In fact, the S&P 500 Index gained 17.4% the first half of the year for its best start to a year since 1997 and eighth-best start since 1950.

The big question on everyone’s mind now is, How much is left in the tank after such an impressive start? “In the go-go 1990s, big starts to a year only led to further strong gains; the problem is, if you go back further in time, weakness is quite normal,” explained LPL Senior Market Strategist Ryan Detrick.

As our LPL Chart of the Day, What Do Stocks Do After A Big Start To A Year?, shows after a big start to a year, the final six months not only have shown below-average performance the rest of the year, but also above-average pullbacks.

As we explained in our recently released Midyear Outlook 2019, we maintain a fair-value target on the S&P 500 of 3,000 in 2019. This great start to 2019 was nice for investors, but the second half of the year could be a bumpy ride, and we believe stocks may finish the year only a few percentage points from where they are currently.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This Research material was prepared by LPL Financial, LLC.

Please see the Midyear Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets for additional description and disclosure.

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