Boltwood Capital Management | History Lesson: What to Expect After Strong First Half
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History Lesson: What to Expect After Strong First Half

After a dismal end to 2018, the S&P 500 has come back with a vengeance in 2019, gaining more than 17% in the first six months of the year. The tremendous first half gain was index’s highest since 1997, when it rose 19.5%, and ranks as the 8th best first half return since 1950.

As we take a moment and digest the incredible results for the U.S. stock market so far in 2019, we thought it would be interesting to take a look at how the S&P 500 index has fared historically after a strong first half. Going back to 1950, there have been twenty-one years (excluding 2019) were the index generated a first half return of more than 10%.

  • In 17 of the 21 years, second half returns were positive and added to the total return for the year.
  • In 4 of the years – 2013, 2003, 1958 and 1954 – the second return actually exceeded the first half.
  • In only four years – 1987, 1986, 1983 and 1975 – did the index decline in the 2nd half of the year.
  • In all of the 21 years with first half returns of more than 10%, the S&P 500 ultimately finished higher for the year. Even in 1987, where the 2nd half of the year included the Black Monday crash and the index declined more than 18%, the total return for the year was positive.

The chart provides a visual display of these results.

History would suggest that positive momentum for the market would carry forward into the 2nd half of the year. Of course, history may not be predictive of future results and we would absolutely expect that the 2nd half results for 2019 will be impacted by the ongoing U.S.-China trade negotiations, interest rate policy and other events.