The S&P 500 index entered its historically strongest seasonal period on Wednesday. Data since 1950 indicates that the index has risen between mid-October and the end of the year in 80% of cases. Analysis shows that from the October 13 close through year-end, the index gained in 61 out of 76 years, with a median return of 4.2%.
Historical performance suggests that when the index enters this window with gains between 10% and 20%, it finishes higher in 21 out of 25 instances. November has shown positive returns in 13 of the last 14 years, while December has averaged a 0.10% gain. Current market conditions include a four-year bull market and projected third-quarter earnings growth of 29.2%.
Recent inflation data presents a challenge to this trend, as prices rose 3.7% year-on-year in September, with gasoline costs increasing 9.1% in one month. The Federal Reserve implemented a rate hike in September, and a potential second hike before year-end is under consideration. The index fell 0.75% on the first day of the seasonal window following recent record highs.
