The S&P 500 index has historically produced “above average returns” in the fourth quarter when the S&P 500 is up 10%-20% through the end of the third quarter, according to Ryan Detrick, Chief Market Strategist at Carson Group.
Historical Precedents Point to Fourth-Quarter Gains
Detrick stated on social media platform X that this performance range represents the “sweet spot” for year-end equity performance.
Data published by Carson Investment Research showed that under these specific conditions, the index posted positive fourth-quarter returns in 18 out of 21 historical setups since 1950, yielding an 85.7% positive rate with an average fourth-quarter return of 5.3%. As of late Sept. 25, the S&P 500 was up 12.90% year to date.
Recent Track Record and Historical Averages
Detrick highlighted that fourth-quarter performance has been “extremely strong lately,” noting that the S&P 500 finished higher in 12 of the past 13 years.
According to Carson Investment Research data, the fourth-quarter average return over the last 13 years was 5.4%, with a median gain of 6.5%. Detrick noted that the single negative fourth quarter during this period occurred in 2018 when the index fell 14.0%, which he described as “the crash of 2018” and “the last time we had a midterm year under President Trump.”
For all years since 1950, the average fourth-quarter S&P 500 gain is 4.2%, with positive returns occurring 80.3% of the time.
Market Drivers and Sector Performance
During an episode of the “Facts Versus Feelings” podcast, Detrick stated that he expects a “strong fourth quarter” and maintains an overweight position in technology stocks. Detrick noted that technology comprises 39% of the S&P 500 and communication services accounts for another 11%.
On the podcast, Sonu Varghese, Chief Macro Strategist at Carson Group, stated that technology sector revenues are expected to grow 40% in the third quarter. Detrick added that market history over the last century demonstrates that technology tends to lead bull markets.
How Has the Stock Market Performed?
The S&P 500 index has advanced 13.12% year-to-date. Similarly, the Nasdaq Composite index was up 16.46%, and the Dow Jones gained 7.83% YTD.
On Friday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed higher. SPY rose 0.54% to $771.35, while QQQ gained 0.46% to $744.50. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), ended 0.94% higher at $517.49.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
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