Year-to-date (YTD) through June 17, 2021, the S&P 500 gained 12.4%, the 19th strongest first half since WWII, observes CFRA Research chief investment strategist Sam Stovall, in the research firm's flagship newsletter, The Outlook.
Despite nervousness over CPI and Covid-19, this YTD return was the second strongest of first-year presidents since Harry S. Truman, behind George H.W. Bush (41)’s 14.5% surge.
In the current near-six-month period, all sizes, styles, and sectors in the S&P Composite 1500 gained in price, led by small- and midcaps, along with value stocks, and the energy, financials, materials, and real estate sectors.
In addition, 94% of the 147 sub-industries in the S&P 1500 rose, with coal & consumable fuels, oil & gas drilling, and oil & gas exploration & production posting the top returns, while footwear, metal & glass containers, and movies & entertainment fell the furthest.
Where will the market likely go from here? History says, but does not guarantee, that that second half should be good, but not as great as the first half. Indeed, following the top-20 first half returns, the second half gained an average of a little less than 50% of the first half.
Interesting, because CFRA’s late May update to its 12-month target price for the S&P 500 (now 4620) indicated a 4444 year-end 2021 price, which is nearly 6% higher than the recent close.
Factors contributing to this forecast include second-half GDP growth of about 5.5%, along with a near-9% rise in S&P 500 EPS.
Plus, while the 10-year yield should creep higher, it is expected to remain below 2.0% by year end. Also, we see the Fed maintaining its zero-rate policy for at least the coming 12 months.
This price advance will not be easy, however, as we see elevated nervousness over the expected rise in inflation leading to increased volatility.
Representative companies from this list of S&P 1500 sub-industries trading the highest YTD returns are: CNX Resources (CNX), Diamondback Energy (FANG), Patterson-UTI Energy (PTEN), Best Buy (BBY), Cleveland-Cliffs (CLF), Williams-Sonoma (WSM), Louisiana-Pacific (LPX), and Goodyear (GT).