Despite momentum propelling stocks to record highs, there are reasons to expect some volatility during the second half of 2024. According to data compiled by independent market research company CFRA, years in which the S&P 500 experienced big Q1 gains also had 2 intra-year declines of at least 5% thereafter. And the second intra-year decline has been larger than the first on average. During years when Q1 returns were among the 15 largest ever (which occurred this year, with the S&P 500 adding 10.2%), the first decline thereafter averaged 10.7% and the second decline averaged 12.6%. Back in Q2 of this year, the S&P 500 lost 5.5% (which was the first decline of 5% or more after the Q1 gains). Obviously, stocks have recovered all those losses and then some. Notably, stocks have ended the year substantially higher in the other 14 instances of top Q1 gains (with an average 21% full-year gain). With that said, history suggests the rest of the year may have at least 1 more intra-year market decline forthcoming.
