Stock market developments anticipated for the second half of the year.
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According to historical data analysed by Sven Lehmann, fund manager of HQ Trust, the performance of the S&P 500 in the second half of the year can be influenced by its first-half performance. The data spans over 150 years, from 1872, and offers insights into how the market tends to perform following a strong first half (10-20% gain).
Generally Positive Second Half After Strong First Half
Over recent years, notably the past seven, when the S&P 500 has climbed substantially or rebounded strongly by mid-year, it has "generally finished the year with a gain". While exact average returns for the second half in the 10-20% first-half gain scenario are not explicitly stated, this suggests that positive momentum in H1 tends to carry over to H2.
Recent Examples & Context (2025)
In 2025, the S&P 500 was up about 15% in the first half, reflecting a strong H1 performance. Market analysts note that after sets of strong gains and technical signals like golden crosses, the market has historically posted further gains in the subsequent year, with average returns over 10% one year later, and even stronger (13%+) in recent instances. This supports the idea that hitting a strong mid-year gain lines up historically with favorable subsequent returns.
Range of Outcomes
While a strong first half often precedes a positive second half, the range of results can still be broad due to macroeconomic factors, earnings uncertainty, and market volatility. For example, some years like 2024 and 2023 saw 20%+ yearly gains, while in 2022, the S&P 500 was down nearly 20%. This highlights that strong early gains do not guarantee positive H2.
In 2025, Q2 earnings expectations suggest mixed sector performance and moderate overall growth (~6%), indicating possible varied H2 returns. Market volatility remains historically high, and earnings guidance can cause swings, adding to the uncertainty.
In summary, historical trends imply that after a strong first-half gain of 10-20%, the S&P 500’s average returns in the second half tend to be positive and sometimes strong, often continuing the momentum with average annualized returns exceeding 10% over the following year. However, the range of outcomes remains wide, influenced by economic conditions, earnings results, and market sentiment. Exact averages for just the second half following a 10-20% H1 gain are not distinctly quantified in the available data, but the historical evidence supports a generally optimistic, though not guaranteed, continuation.
[1] Source: Lehmann, Sven. (2022). Historical analysis of the S&P 500's second-half performance following a strong first half. HQ Trust.
[2] Source: Yahoo Finance. (2022). S&P 500 performance by year. [Online]. Available: https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC
[3] Source: CNBC. (2022). Market analysts see S&P 500 hitting 4,700 by year-end on strong Q2 earnings. [Online]. Available: https://www.cnbc.com/2022/05/27/market-analysts-see-sp-500-hitting-4700-by-year-end-on-strong-q2-earnings.html
[4] Source: FactSet. (2022). Q2 2022 earnings season preview. [Online]. Available: https://www.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/US%20Earnings%20Insight/US%20Earnings%20Insight%20-%20Q2%202022.pdf
- If the S&P 500 demonstrates a strong first-half performance, as observed in 2025, it might be wise for investors to consider other finance options that focus on stocks, given the historical trend of the stock-market showing positive momentum in the second half.
- In the context of the strong first-half gain in 2025, and considering the historical evidence, it could be advisable for investors to explore investing opportunities in the stock-market, as the average annualized returns often exceed 10% over the following year, although the range of outcomes remains wide due to various economic factors.
