The S&P 500 (SP500) will experience a return pause during the first half of the year before yielding higher returns in the second half as the U.S. election nears, according to BofA Securities’ 2024 Equity Technical Strategy Year Ahead report.
The S&P 500 (SP500) is typically up 75% of the time during presidential election years, such as 2024, with a solid average return of 7.5% and a median return of 10.7% over the 24 cycles from 1928 through 2020.
However, that suggests a pause in the first half of the year before a higher second half, BofA analysts said.
“The SPX can struggle in early Year 4 given lackluster January through May returns in presidential election years,” they said in the report.
Analysts expect a summer rally from June through August, and then a November-December post-election relief rally.
In addition, the S&P 500 (SP500) was up 24.2% in 2023 after dropping 19.4% in 2022. BofA analysts said that the S&P 500 is up 86% of the time on an average return of 13% in years following an up year, such as last year, which followed a down year.
Because of this, analysts expect the S&P 500 (SP500) to be in the 5300-5400 range by the end of 2024.
When it comes to a price target, analyst said, “the big base (cup and handle) counts to 5200 and 5600 and remains firmly in place above the 4600 area. The rising 40-week market average near 4400 and rising 200-week market average near 4000 reflect the mid cycle cyclical and secular bullish trends, respectively, that underpin this positive technical setup.”