'A lackluster January through May': One chart shows what stock investors can expect in a crucial election year

2024 represents a crucial year for the stock market as the fourth year of the current presidential cycle gets underway, according to Bank of America. The fourth year of a presidential term is the second-strongest year for the stock market, with the S&P 500 historically posting solid median and average returns of 10.7% and 7.5%, respectively, according to data going back to 1928. Only the third year of a presidential term is stronger. One idea behind the solid performance during the fourth year of the presidential cycle is that the incumbent president will try to give the economy one last boost via fiscal spending to increase their chances of getting re-elected.


While the stock market has historically delivered solid returns and a win ratio of 75% during the fourth year of a presidential cycle, the gains are rather choppy and don't happen until the second half of the year. "Average monthly returns for the S&P 500 during Presidential Cycle Year 4 show a lackluster January through May, a June through August summer rally, a September through October pre-election dip and a November through December post-election relief rally," Bank of America technical strategist Stephen Suttmeier said in a Wednesday note. The strongest month of the year tends to be August, delivering an average gain of just over 3% with a win ratio of 71%. Meanwhile, December is typically the month with the highest chance of gains, with a win ratio of 83% as uncertainty around the presidential election subsides. Finally, May tends to be the weakest month of the year, with an average decline of 1.1%.


Despite the likely choppiness in the first few months of 2024, Suttmeier is constructive on stock returns thanks to big bases across major stock market indices that are on the verge of breaking out, as well as the high-yield market confirming the risk-on rally seen during the last two months of 2023. "Given big bases across many US equity indices and plenty of confirmation from other key indicators in late 2023, we believe that a tactical hangover in early 2024 should precede a solid 2024," he said.

30 December, 2023

Read more:

World Bank: approved $350 million financing for RISE-II operation in Pakistan

07 December, 2023

China keeps Loan Prime rate steady at record Lows.

14 December, 2023

With Bitcoin Spot ETF Approvals, Halving and Incoming Upgrades, What Should You Expect from BTC in 2024?

05 December, 2023

Polygon Labs Announced Upcoming Updates for Products and Events Expected in December

28 November, 2023

Cross-Chain Protocol Wormhole Secures $225M in Funding, Now Valued at $2.5B

22 November, 2023

United Kingdom Seeks to Strengthen Its Digital Asset Sector

14 November, 2023

The Dow Jones has seen a dreaded 'death cross.' Here's what it means.

06 November, 2023

USDT Accounts for 80% of All Crypto Transactions in Brazil in 2023

30 October, 2023

US SEC Approves Grayscale’s Ethereum ETF Filing

22 October, 2023

Binance Secures New Euro Banking Partners to Resume Fiat Transactions

16 October, 2023

Bitcoin Is Good Hedge in Current Geopolitical Tensions, Says Paul Tudor Jones

10 October, 2023

Circle Intervenes in SEC Case against Binance, Defends Stablecoins’ Regulatory Status

29 September, 2023

Web3 Startup IYK Raised $16.8M in Recent Funding Round Led by A16z

27 September, 2023

Bybit to Suspend UK Operations in Response to FCA’s New Rules

24 September, 2023

Celsius Former Chief Revenue Officer Pleads Guilty to Criminal Charges, Awaits Sentencing

15 September, 2023

US Judge Dismisses Class Action Suit against Uniswap

31 August, 2023

Binance Phasing Out Support for BUSD Stablecoin by Q1 2024

31 August, 2023

Arrange a call