Stock markets last witnessed such occurrence 27 years back.
The S&P 500, a significant indicator for the global economy, has performed exceptionally well in the first nine months of the year, gaining approximately 21%. Historically, this strong start tends to presage continued outperformance in the fourth quarter, particularly in environments of easing interest rates and robust earnings.
Since 1950, the S&P 500 has averaged a 4.1% return in Q4, reflecting a seasonal rally pattern. This Q4 strength is often supported by factors like Federal Reserve interest rate cuts, which reduce borrowing costs and foster economic expansion, typically boosting equities.
In 2025, the S&P 500 showed double-digit earnings growth for three consecutive quarters, with analysts projecting a 13% price increase over the next 12 months. The forward price-to-earnings (P/E) ratio is somewhat elevated, but this has not yet dampened price gains, which often align with strong earnings and rate cut environments.
Additional supporting factors include momentum-driven factor performance, with higher-beta and growth-sensitive sectors benefitting during easing monetary conditions, typical in Q4 when the Fed cuts rates. The anticipated lowering of interest rates by the Fed in late 2025 supports the case for a bullish Q4.
The current bull market, if it started from October 2022, could potentially last another three years. Even September, traditionally a weaker stock market month, performed better in 2022. The last time the S&P 500 performed this well was in 1997.
The trend since 1990 suggests a potential continuation of the stock market rally in the fourth quarter of 2024. The S&P 500 has always gained in the remaining months of the year, with one exception in 2012. The statistic suggests that the rally in the stock markets in 2024 has not yet come to an end.
It's important to note that while historical and statistical context can provide insights, it does not guarantee future performance. Investors should always consider their individual risk tolerance and investment objectives when making decisions.
In conclusion, the strong performance of the S&P 500 in the first three quarters of the year, combined with historical and statistical trends, suggests a bullish outlook for Q4 2024. However, it's crucial to approach investments with caution and consider the potential risks.
The strong performance of the S&P 500 in the first three quarters of the year, particularly in environments of easing interest rates, might lead to further investing in the stock-market during Q4 2024, as historical data indicates a potential continuation of the rally. Moreover, the trend since 1990 suggests an ongoing stock-market rally in the fourth quarter of 2024, which could result from lowering interest rates by the Fed, as was observed in 1997 and other years.
