To close out the first half of 2024, stocks, for the most part, built on their year-to-date gains in June. Relatively speaking, June was a quiet month for the market. Below are the June returns for the popular benchmarks that investors track (Data provided by Y-Charts & Commonwealth Financial Network):

S&P 500 Index: +3.5%
Dow Jones Industrial Average: +1.1%
Nasdaq Composite Index: +6%
Russell 2000 Index: -1.4%
S&P Target Moderate Risk Index: +1.1%

As summer approaches, it is noteworthy, in my opinion, that stocks have performed well overall this year, with minimal volatility. The seasonality of the VIX Index, which we use to measure market volatility, is seen in the graphic below. Most of the time, when volatility (the VIX) is elevated or rising, stocks are under pressure. When volatility is subdued or falling, stocks are usually doing pretty well.

As you can see in the chart above, it is relatively normal for the VIX to be subdued during the first half of the year. However, you can see that as we move into the late summer/early fall, it is not abnormal to see the VIX start to rise. This adds to our confidence that we will get some sort of volatility leading up to the election this year.

This chart is intriguing since it shows the VIX declining in Q4, consistent with our prediction of a relief rally following the election at year’s end. Of course, the future will not play out exactly as in the past, but at least we know what to expect for the rest of the year. The S&P 500 is up double digits halfway through the year. That is a big deal and a positive development for stock market bulls. Below is a graphic that shows each year (since 1950) that the S&P 500 was up double digits at the year’s midpoint. The entire year has never finished lower, and the second half of the year has averaged a 7.7% return.

Earnings season is right around the corner, with publicly traded companies reporting their financial results starting the second week of July.

Our game plan has not changed. We expect weakness in stocks two months before the election, but overall, we believe that 2024 will finish well in the green.

As always, don’t hesitate to reach out to our team with any questions you may have.