S&P 500 May Reach Unprecedented 6,000 by Year-End Following Unusual September Gains

Investing.com – The S&P 500 achieved gains in September, defying the typical trend of being the weakest month of the year. According to a recent analysis from Bank of America, historical patterns suggest that the index could be positioned for a further rally, potentially reaching an unprecedented 6,000 by the end of the year.

Bank of America analysts noted that when the S&P 500 has positive performance in September, the remainder of the year tends to deliver stronger returns. Specifically, the index has increased 67% of the time in October, with an average return of 1.62% (1.54% median), and has risen 79% of the time in the fourth quarter, averaging a return of 5.08% (5.81% median). This trend supports the expectation of reaching the 6,000 mark by year-end.

Normally, September is considered the weakest month for the S&P 500, yet this year, the major index grew by 2.02%, contributing to a year-to-date gain of 20.81%. This sets a favorable stage for a potentially strong fourth quarter.

Historical data indicates that when the S&P 500 is up between 15% and 25% year-to-date through the third quarter, the index averages a fourth-quarter return of 4.40%. This suggests that the index could conclude the year with gains ranging from approximately 5,930 to 6,185.

Furthermore, the robust performance in the third quarter during a presidential election year is a positive sign for the S&P 500. Bank of America highlights that in election years with positive performance, the fourth quarter sees positive returns 89% of the time, with an average return of 4.98%.

However, despite the optimistic outlook for continued gains, analysts emphasized the importance of the S&P 500 holding key support levels in case of a downturn. They stated that maintaining the 5,670 to 5,650 range would help keep the current upward trend intact. The path to further gains is likely to experience volatility and potential risks as the year progresses.