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Big First Half Gains Could Indicate Strong Finish for Stocks in 2023
Historic Data Suggests Positive Second Half for Stocks
According to CFRA, a positive first half typically leads to gains in the second half of the year 72% of the time, which is slightly higher than the normal 69% average dating back to 1945. Moreover, when stocks experience a strong start, the finish is usually stronger. With the S&P 500 up by 14.5% for the year, the second-half average return could increase by as much as 8%, compared to the usual 4.2% average return for the July-through-December period. The potential for gains in the second half has occurred 82% of the time.
The Outlook for Investors
The year 2023 has commenced on a positive note for stocks, increasing investors' optimism for the second half of the year. With a gain of nearly 15% for the S&P 500 through June 16, investors may anticipate a great finish. Sam Stovall, who serves as CFRA's chief investment strategist, advised investors to "hold onto their hats" in preparation for a strong H2 for stocks. An impressive H2 could mean celebrated gains for investors.
Several factors will play a crucial role in determining stock performance in the second half of 2023. The outcome of the U.S. Presidential Elections, COVID-19 and vaccination rates, foreign policies, and the recovery of leading industries will play a critical role in shaping the financial markets' direction. Nevertheless, as per historic data, a positive first half performance is likely followed by an even better H2. Therefore, it is reasonable for investors to expect a surge in stock prices and returns in H2 2023.
Investment Strategies for Investors in the Second Half of 2023
The historical data regarding the second half of 2023's potential stock gains should encourage investors to maintain long-term investment strategies. Maintaining a long-term perspective will help investors navigate the inevitable market fluctuations in the second half of the year. Investors should rebalance their portfolios and refrain from making impulsive trading decisions. Those seeking to invest in new stocks in H2 2023 should seek financial counsel to identify undervalued assets that will deliver long-lasting gains.
As the first half of 2023 indicates a positive start for stocks, new businesses should consider the potential impact of the historic data on investment strategies. The expected surge in stock prices and returns during H2 2023 should encourage start-ups to seek investment opportunities that will deliver long-lasting gains. With the potential for gains occurring 82% of the time, new businesses should take a long-term perspective and exercise caution when making impulsive trading decisions.
However, factors such as the outcome of the US Presidential Elections, COVID-19 and vaccination rates, foreign policies, and the recovery of leading industries could impact stock performance. Thus, it is crucial for new business investors to seek financial counsel to navigate the inevitable market fluctuations in H2 2023.
Investors, including new businesses, should continue to maintain long-term investment strategies and seek undervalued assets with potential for long-lasting gains. The potential for a strong finish to stocks in H2 2023 should encourage investors to exercise caution and seek financial advice before making any investment decisions.