With the S&P 500 maintaining a bullish performance and hitting new highs, a banking giant is estimating that momentum is likely to continue in the coming weeks before stalling.
Notably, the benchmark has posted consecutive days of positive returns, ending the last session at 6,204, up 0.5%. Over the past week, the S&P 500 has rallied 4.5%, mainly driven by hopes for trade deals and potential rate cuts.
Now, in a June 30 investor note, Goldman Sachs’ flow specialists said they expect the benchmark index to keep climbing through July, supported by a combination of liquidity, collapsing volatility, fading recession fears, and strong seasonal trends. However, they notice that momentum is running out in August.
That timing aligns with historical patterns. July is typically the best month of the year for the S&P 500, with an average gain of 1.67% dating back to 1928. The first two weeks of July are especially strong, often delivering the best returns of any two weeks of the year.
S&P 500’s strong July returns
This view is supported by Bloomberg data, which shows that over the past decade, the S&P 500 has never logged a negative July. From 2014 to 2023, July posted positive returns every single year, with gains ranging from 1.3% in 2014 to a massive 9.1% surge in 2022.
But Goldman’s strategists warn that investors shouldn’t expect the party to last deep into the summer.
August has been far more volatile and far less rewarding. During the same 10-year period, the month has posted negative returns in six of those years, including declines of 6.3% in 2015, 6.8% in 2022, and 4.2% in 2023.
The bank also noted that systematic investors, those who trade based on fixed rules, still have significant firepower, with roughly $80 billion in global equity demand projected over the next month.
For now, buying support and a drop in volatility are buoying stocks. But the bank expects those tailwinds to fade, leaving the market more vulnerable to profit-taking or risk-off sentiment in August.
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