S&P 500 Defies September Weakness, Eyes Record 6,000 by Year End: Bank of America Analysis
In a surprising turn of events, the S&P 500 index saw gains in September, typically the weakest month of the year. Bank of America analysts now predict a potential rally to an unprecedented 6,000 by year end, based on historical trends.
According to the analysts, when the S&P 500 is up in September, the rest of the year tends to have stronger returns. This sets the stage for a potentially robust fourth quarter, with average returns of 1.62% in October and 5.08% in the fourth quarter.
Despite September's typical weakness, the S&P 500 gained 2.02% in the month, adding to its year-to-date gain of 20.81%. Historical data suggests that when the index is up between 15% and 25% year-to-date through the third quarter, the fourth quarter return averages 4.40%, potentially pushing the index to end the year between 5,930 and 6,185.
Additionally, the strong gains in the third quarter during a presidential election year bode well for the S&P 500, with a positive fourth quarter seen 89% of the time and an average return of 4.98%.
However, the analysts caution that the index must maintain support levels to sustain further gains. They emphasize the importance of holding the 5670-5650 to 5615 area to keep the breakout firm in place. They also warn of potential volatility and risks in the final quarter of the year.
In conclusion, based on historical trends and current market conditions, the S&P 500 is poised for a potential rally to 6,000 by year end. Investors should keep a close eye on support levels and be prepared for potential volatility in the coming months.