Markets have seen an apprehensive climb toward all-time highs, but if this statistical trend holds for stock benchmarks, there’s a lot more room to go.
Data from the Dow Jones Data Group dating back to 1950 shows that when the Dow Jones Industrial Average DJIA,
and the S&P 500 Index SPX,
end October with as sizeable a profit as they have already achieved, positive returns for the remainder of the year are all but assured.
And those gains are remarkably stellar historically.
Specifically, if the Dow is up at least 15% in the calendar year through October, the index has an average return of 5.55% over the next two months, with an average year-to-date return of 27.17%. The Dow ended October up 15.94%.
If the S&P 500 is up at least 20% through Oct. 31 — it closed up 21.17% — the benchmark’s return for the remainder of the period averages 6.21%, with an average full-year gain of 33.8%.
Though the Nasdaq doesn’t have such a pristine record, the index has gained 90% of the times it’s up at least 20% this time of the year (it closed up 24.97% on Thursday), the data shows an average return of 7.48% for the remaining two months and a year-end gain of 42.81%.
Cashbox:MarketWatch’s snapshot of the market
Certainly, past results are absolutely no guide to future returns, and U.S. stocks fell on Thursday amid mounting concerns over the likelihood that the U.S. may soon hammer out a genuine trade deal with China, and with it a vote on impeachment President Donald Trump was impeached handed over to the House of Representatives.
All three benchmarks are on track to end a historically volatile period for equities in positive territory after a series of political worries, including the US trade dispute with China and the UK’s long-controversial plan to leave the European Union. The Dow ended October up 0.48%, the S&P 500 is up 2.04% month-to-date and the Nasdaq is up 3.66% for the month.
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However, October trading did not start on a strong note, with the Dow, S&P 500 and Nasdaq posting consecutive losses of at least 1% before stabilizing at the start of the month.
Now stocks are entering a historically strong period for stock markets. Data shows that November-January is the strongest three-month range of the year, with average gains of 5.94% in November and 5.1% in December.