The United States stock market has been rallying recently, with the S&P 500 index at the center of this momentum. For investors, historical data suggests that the perfect time to get involved in the market may have just arrived.
In this case, late October marks the start of what has historically been the most favorable trading period for U.S. equities in the fourth quarter.
Data suggests strong seasonal trends that benefit both the S&P 500 (SPX) and the Nasdaq 100 (NDX) through year-end, according to market analyst Holger Zschaepitz in an October 29 X post.
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The analyst referenced data by Goldman Sachs (NYSE: GS), led by expert Scott Rubner, highlighting that U.S. stocks have shown consistent gains from October 27 to December 31.
According to the research, the S&P 500 has historically delivered a median return of 5.22% since 1928. This return has been even higher in election years, averaging 6.25%.
“The best trading period of Q4 for US equities started today, w/data going back to 1928,” Zschaepitz said.
For investors looking to get involved, a previous Finbold report indicated that buy-and-hold, intraday trades, and after-hours trading are among the best strategies for maneuvering the S&P 500 index.
NDX historical returns
On the other hand, the technology-heavy Nasdaq 100 (NDX) has shown even stronger performance in this timeframe. Since 1985, the NDX has produced a median return of 11.74% from October 27 to December 31.
This historical data may help alleviate recent concerns about a potential recession.
The end-of-year rally is typically fueled by a combination of factors such as corporate earnings and increased retail investment capital flows, creating a favorable environment for stocks as this period also offers lower volatility.
This positive outlook comes as analysts foresee a continuation of the recent market rally towards the end of the year. For instance, economist Henrik Zeberg has projected that the S&P 500 index will likely reach 6,000 points.
What next for S&P 500 index
Looking at index performance, the S&P 500 is aiming to establish itself above the 5,800 zone. To this end, in an X post on October 28, Wall Street Charts analysis indicated that the SPX is struggling to break the 5,850–5,870 resistance range. A break above this level could signal further growth.
The analyst also noted that if the index remains within the 5,800–5,850 range, it could break out in either direction. Despite this resistance, the S&P 500 has achieved its best 12-month performance since 1954.
Meanwhile, the upcoming November 5 United States presidential polls are crucial for the stock market’s trajectory.
Policies likely adopted by both presidential candidates continue to spark speculation on how the markets might react, with institutional investors suggesting that a Donald Trump win could be bullish for equities.
Featured image:
Owlie Productions – October 29, 2024. Digital Image. Shutterstock.
