A Summer Stock Melt Up?

The summer heat is on for equities

Memorial Day kicked off the unofficial start to summer this week, and stock investors could be looking at some sunny days ahead.

The reason: The S&P 500 Index’s return from June 1 through July 31 has been positive in nine of the past ten years. The month of June saw gains nine times over that period, while July boasts a perfect 10-for-10 record.

Even better, these summer months represent the index’s best two-month performance stretch over the past decade— with an average return of 5.2% (see the chart).

While there’s no guarantee that this June and July will follow suit, some trends behind the stock market’s recent gains appear firmly established. For example:

Given the strength of these current drivers, a bearish stance appears to be a timing call with a relatively low probability of success. Although the market’s rebound may encourage some investors to lock in gains, the broader backdrop of supportive fundamentals, positive momentum, and historically strong summer seasonality continues to favor maintaining a constructive stance toward equities.

Authored by Mike Dickson

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