July Expected to Bring Strong Performance to Wall Street, Second-Quarter Earnings Season Anticipated to Impress

As we reach the halfway mark of 2024, the stock market has experienced a remarkable first half of the year. The S&P 500, Dow, and NASDAQ have all seen significant gains of 14.5%, 3.8%, and 18.1% respectively, with record highs being achieved by the S&P 500 and NASDAQ. The Dow also broke the key milestone of 40,000 points. These figures surpass the historical average gains of the S&P 500, which stood at 4.72% over the past 71 years.

Despite the strong start, investors remain cautious about the future direction of the market. Factors such as potential rate cuts by the Federal Reserve, the upcoming presidential election, and the traditionally slower summer months could impact market performance. However, market analysts anticipate a robust July for Wall Street.

Historical data supports this optimism, as July has historically been the best month for the S&P 500, with an average gain of 2.29% over the past 20 years and a 75% success rate. Similarly, the Dow has consistently performed well in July for over a century, with an average gain of 1.73% over the past 100 years and a 2.09% average gain in the last 20 years, achieving gains 80% of the time.

The market has already shown signs of strength this month, with the S&P 500, Dow, and NASDAQ all trending higher on Monday. This momentum is expected to continue, fueled by the upcoming Fourth of July holiday. Historically, the stock market tends to rally before long weekends, as the positive mood of Main Street spills over to Wall Street.

Once the holiday is over, attention will shift to the second-quarter earnings season, which is projected to be even stronger than the first quarter. FactSet estimates that the S&P 500 will achieve earnings growth of 8.8% and revenue growth of 4.6% for the second quarter. This positive outlook for earnings is likely to further boost market sentiment.

In addition to the earnings season, another event that could impact select stocks is the Real AI Boom. While the focus has been on first-generation artificial intelligence, the real potential lies in companies that use AI to revolutionize traditional business models. A new next-gen AI company has recently emerged, offering an optical compute and memory fabric solution that enhances AI infrastructure and has the potential to create and sustain future AI models. With strong earnings, this company is well-positioned to benefit from the Real AI Boom and the upcoming earnings season.