July's stock market history:
Bottom Line: The first half of 2017 has been nothing short of awesome for investors. After a huge post-election rally into the year end leading to above average gains in 2016, stocks have already provided about a year's worth of returns for investors within the first six months. Through June here's the performance of each of the major indexes:
- DOW: +8%
- Nasdaq: +14%
- S&P 500: +8%
That's the best first half performance for stocks in four years which isn't terribly surprising as corporate earnings growth has been the best in six years so far in 2017. So what does July typically hold for stocks?
Going back to 1950 and (using the S&P as the barometer):
- Stocks are higher 55% of the time
- The average rate of return has been about .9%
So July has historically been a better than average month, fifth best overall for stocks. Deregulation and outstanding earnings drove the market to a great first half of the year. What's next? Does the Trump train pull into the station for awhile, fall off the tracks, or advance full speed ahead? That answer is in part going to rest in Washington. Will we get the pro-growth reforms passed this year? If the legislative agenda moves forward there's room for optimism. If it doesn't it could be room for concern. Most investors are carrying large gains and it wouldn't take much for some nervous moves to the sidelines if we don't get meaningful movement on healthcare and tax reform this year.