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SOLID FIRST HALF TILTS ODDS TOWARD FURTHER S&P 500 GAINS - CFRA

With the first half of 2026 about to wrap up, the S&P 500 .SPX looks set to finish on a strong note, with current gains of just over 8%. If you follow the historical playbook, that could be a good sign for what’s ahead.

According to CFRA’s chief investment strategist, Sam Stovall, a solid first half like this doesn’t guarantee more gains — but it does tend to tilt the odds in the market’s favor, even with the potential for short-term volatility. In a note released Monday, he highlighted that the index has already notched 24 all-time highs through June 26. That places this year among the top 20 first halves since World War Two. In those prior instances, the S&P 500 went on to gain about 6% in the second half and rose 80% of the time.

More broadly, the market has climbed in the second half about 72% of the time since World War Two. When the first half is positive, that success rate rises to 77%. And when the index gains more than 5% in the first six months — as it has so far this year — the odds improve further, with the market advancing in the second half about 81% of the time. Stovall notes that this pattern has also held up during mid-term election years or second-year presidential terms.

One concern earlier this year was narrow market breadth, with gains heavily concentrated in tech, particularly semiconductors and AI-related stocks. But that’s started to change. In June, sectors like financials, industrials, and healthcare have begun to pick up momentum — a shift Stovall sees as a healthy sign that the rally is broadening.

On the fundamental side, he expects steady economic growth, easing inflation, and a slightly lower Fed funds rate next year. He also points out that valuations look relatively reasonable, with the market’s forward (NTM) P/E trading near its five-year average. Importantly, he characterizes this year’s rally as being driven more by earnings than by multiple expansion — a more sustainable backdrop.

CFRA’s preferred positioning reflects that outlook, with overweight recommendations on industrials and tech, and underweight stances on energy, materials, and real estate.

(Terence Gabriel)

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