The U.S. stock market has shown robust performance in the first nine months of 2024, and historical trends suggest that this upward momentum may continue into the last quarter of the year. According to Dow Jones Market Data, when the S&P 500 index rises by more than 20% in the first three quarters, it generally continues to increase in the fourth quarter.
Since 1950, there have been ten instances where the S&P 500 has risen over 20% in the first nine months, including 2024. In nine of these instances, the index averaged a 2.1% gain in the fourth quarter, with a median return of 4.1%. Over 77% of the time, the index continued its upward trend in the fourth quarter. Notably, in two instances, the S&P 500 performed poorly in the fourth quarter, such as in 1987 during the "Black Monday" sell-off. Despite this, the index still managed a slight 2% increase that year.
Similar patterns emerge in other stock indices like the Dow Jones Industrial Average and the Nasdaq Composite. Since 1950, the Dow has risen over 10% in the first nine months 29 times, including 2024. In 23 of these instances, it continued to rise in the fourth quarter, with a median increase of 4.9%. The Nasdaq Composite has climbed over 20% in the first nine months 19 times, again including 2024, with the index increasing in the fourth quarter 14 times, with a median rise of 6.6%.
However, as of the latest data, U.S. stocks have shown weaker performance, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all potentially facing their first weekly decline in a month. If the S&P 500 maintains its 20% gain this year, 2024 would mark the first time since 1998 that the index has posted consecutive years of positive growth.
