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After a dismal 2022, investors are finally breathing a sigh of relief. The stock market is up nearly 10% so far this year, and new research indicates more gains could be on the way.
A recently released analysis by Jeffrey Buchbinder, chief equity strategist for LPL Financial, finds that when stocks perform well during the first 100 trading days of a year, even bigger gains tend to follow in the remaining days.
Buchbinder pointed to data showing that since 1950, in years when the S&P 500 gained at least 7% during the first 100 trading days, the index then went on to gain an average of 9.4% during the rest of the year. This year seems to qualify — the S&P 500 was up 8.1% when that initial 100-day period ended last week — so the outlook is good for the next seven months.
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“Strong starts tend to be followed by solid finishes,” Buchbinder wrote, adding: “The consistency of this pattern over seven decades suggests it is likely to hold up again.”
Of the 26 years where the index gained at least 7% over the first 100 trading days, the market only lost ground in the second part of the year on three occasions.
Given the persistent economic headwinds the market is facing, including a potential recession, Buchbinder acknowledged that a return of 9.4% for the rest of the year may be a little optimistic. He’s targeting gains of about 5% for the remainder of 2023.
Of course, he also emphasized that there’s never a guarantee of anything when it comes to the stock market. Financial advisors say the best way to take advantage of patterns like this one is to invest consistently over a long period of time. That way you’re well-positioned to take advantage of gains like Buchbinder described — without feeling the temptation to time the market.
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More from Money:
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As a seasoned financial analyst with a wealth of experience in market analysis and investment strategies, I have closely followed the trends and dynamics of the financial markets over the years. My expertise extends to understanding the intricate details of market performance, economic indicators, and the factors influencing investment decisions.
Now, let's delve into the key concepts mentioned in the article:
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Market Performance in 2022:
The article begins by referencing the "dismal 2022" experienced by investors. This suggests that the stock market had a challenging or unfavorable year in the previous period.
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Current Market Sentiment:
The article then provides a positive update for investors in the current year. The stock market has witnessed a nearly 10% increase, bringing a sense of relief to investors.
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Research by Jeffrey Buchbinder:
The article introduces Jeffrey Buchbinder, the chief equity strategist for LPL Financial, highlighting his analysis as a key reference point. It mentions that Buchbinder's research indicates the possibility of further gains in the stock market.
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Historical Data Analysis:
Buchbinder's analysis is based on historical data, specifically looking at the performance of the S&P 500 during the first 100 trading days of the year since 1950.
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Pattern of Strong Starts and Solid Finishes:
According to the analysis, there is a historical pattern where strong starts in the stock market tend to be followed by solid finishes for the rest of the year.
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S&P 500 Performance Metric:
The article mentions that in years when the S&P 500 gained at least 7% during the first 100 trading days, the index historically went on to gain an average of 9.4% during the remaining days of the year.
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Cautionary Note:
Despite the positive outlook, the article includes a cautionary note from Buchbinder, acknowledging economic headwinds and potential challenges. He suggests that a return of 9.4% for the rest of the year may be optimistic and sets a more conservative target of about 5% gains for the remainder of 2023.
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Investment Strategy Recommendation:
Financial advisors recommend a consistent, long-term investment approach. The article emphasizes the importance of investing consistently over time to take advantage of market patterns and avoid the pitfalls of attempting to time the market.
In conclusion, the article provides insights into the current state of the stock market, supported by historical data and the analysis of a seasoned strategist. Investors are encouraged to adopt a disciplined and long-term investment strategy to navigate market fluctuations.
FAQs
Instead, earnings may drip down slowly throughout 2023, frustrating market bears. Interest rates on long-term bonds have fallen lower than those of short-term bonds, creating an inverted yield curve that usually portends an upcoming economic slowdown.
Which stock will boom in 2024? ›
Best Stocks to Invest in India 2024
| S.No. | Company | Industry/Sector |
|---|
| 1. | Tata Consultancy Services Ltd | IT - Software |
| 2. | Infosys Ltd | IT - Software |
| 3. | Hindustan Unilever Ltd | FMCG |
| 4. | Reliance Industries Ltd | Refineries |
1 more rowApr 9, 2024
The market sees a greater than 80% chance of at least five rate cuts from current levels by the end of 2024. Investor optimism about the economic outlook has improved dramatically from a year ago, but there's still a risk that Fed policy tightening could tip the economy into a recession in 2024.
When there is unexpected news in the market it will be more likely the market will? ›
Negative news will normally cause people to sell stocks. A bad earnings report, a lapse in corporate governance, big-picture economic and political uncertainty, and unfortunate occurrences all translate to selling pressure and a decrease in the prices of many if not most stocks.
Is 2023 a good year for stock market? ›
Let's review the good times of late 2023. The S&P 500, which tracks the most valuable stocks in the U.S. market, rose 11.2 percent in the last quarter — and had a total return of 11.7 percent, including dividends. For the year, it gained 24.2 percent and returned 26.3 percent, including dividends.
Can the stock market recover in 2023? ›
Investors have plenty to cheer as 2023 draws to a close, with the S&P 500 ending the year with a gain of more than 24% and the Dow finishing near a record high. Easing inflation, a resilient economy and the prospect of lower interest rates buoyed investors, particularly in the last two months of the year.
Will the market be better in 2024? ›
1. Positive returns -- but smaller than in 2023. I think that the overall stock market will deliver positive returns in 2024. However, I expect those returns to be somewhat smaller than they were last year.
Will 2024 be good for stocks? ›
Wall Street analysts' consensus estimates predict 3.6% earnings growth and 3.5% revenue growth for S&P 500 companies in the first quarter. Analysts project full-year S&P 500 earnings growth of 11.0% in 2024, but analysts are more optimistic about some market sectors than others.
What are the stock market expectations for 2024? ›
In 2024, we look for lower yields but expect bouts of volatility along the way, as markets continue to try to anticipate shifts in Fed policy. Assuming the Fed continues to lag market expectations for rate cuts, the market will be very attuned to every data point, likely causing yields to trade in wide ranges.
Should I pull my money out of the stock market? ›
Key Takeaways. While holding or moving to cash might feel good mentally and help avoid short-term stock market volatility, it is unlikely to be wise over the long term. Once you cash out a stock that's dropped in price, you move from a paper loss to an actual loss.
Stock prices have surged significantly over the past 18 months. The S&P 500 is up by 45% since it bottomed out in October 2022, while the tech-heavy Nasdaq has soared by a whopping 58% in that time. Investing now, then, means paying much higher prices than you would if you'd bought a year or two ago.
Will 2024 be a bull or bear market? ›
Economic growth actually accelerated above its 10-year average in 2023. That resilience, coupled with a fascination about artificial intelligence (AI), changed investors' collective mood. The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.
What goes up when market crashes? ›
What goes up if the stock market crashes? There is nothing that will definitely go up if the stock market crashes. Interest bearing investments such as money market funds will continue to earn interest. Bonds may hold their value or increase, and individual bonds including Treasury's will continue to earn interest.
What is a strong market when prices are going up? ›
A bull market is a financial market characterized by rising prices and investor optimism.
What is going to the stock market eventually when it bubbles? ›
Because speculative demand, rather than intrinsic worth, fuels the inflated prices, the bubble eventually but inevitably pops, and massive sell-offs cause prices to decline, often quite dramatically. In most cases, in fact, a speculative bubble is followed by a spectacular crash in the securities in question.
What is the stock market forecast for end of 2023? ›
JP Morgan saw a rough start for stocks, predicting about a 9% annual increase for the index. 7 Wells Fargo got closer, forecasting a target range of 12% to 17% growth for year-end 2023. The market never hit the early lows Comerica forecast, causing their year-end prediction of about 10% growth to fall short.
Is the stock market expected to go up in 2024? ›
1. Positive returns -- but smaller than in 2023. I think that the overall stock market will deliver positive returns in 2024. However, I expect those returns to be somewhat smaller than they were last year.
What stocks are going to go up in 2023? ›
100 Best Stocks 2023: Nvidia, Meta Make The List
| Rank | Company | 2023 Price%Chg |
|---|
| 1 | AbercrmFitch | 285.1 |
| 2 | Vertiv | 251.6 |
| 3 | SuperMicro | 246.2 |
| 4 | Nvidia | 238.9 |
42 more rowsDec 29, 2023
