A look at S&P 500 returns based on the first half of the year, as well as individual stocks
It was a roller coaster ride for the stock market in the first half of the year. The S&P 500 Index (SPX) was down 15% at one point, then rallied to finish positive by over 5%. This week I’m looking at what to expect in the second half of the year for the major index based on the first half. Also, I look at the historical data comparing the best first half stocks to the worst first half stocks to see which ones we would prefer being invested in for the next six months.
S&P 500 Second Half Returns
The table below looks at second half returns for the S&P 500 going back to 1950. Based on this, the better stocks perform in the first half, the better they tend to perform in the second half. With the index up about 5.5% on the year, that puts it right in the middle of that second column in which the S&P 500 has averaged a 4.67% return in the second half with 75% of the returns positive.
I mentioned earlier that the S&P 500 was down about 15% before finishing the year in the black. There have only been two other years since 1950 in which the index was down double-digits in the first half at some point, then rallied to a positive first half return. That was 2016 and 2009, in which stocks were rallying after the 2008 financial crisis. After those two instances, July was very strong with a 3.6% and 7.4% return, respectively. In 2016, the index was up 6.7% for the whole second half and in 2009, it gained over 20% in the second half.
Best vs. Worst First Half Stocks
In this section, I’m determining whether it’s typically better to buy the top-performing stocks from the first half of the year, banking on momentum, or the worst performers, assuming they tend to rebound in the second half. The data below summarizes the second half returns for the 25 best first-half stocks, the 25 worst first half stocks and the others.
It turns out, buying one of the best performers was just as good as buying one of the worst performers and either of those beat the ones in between. Over the past ten years, buying the best 25 stocks in the first half of each year or the worst 25 stocks in the first half of the year would have averaged a return of 13% or 11% in the second half. Buying the stocks with a moderate return would have averaged about 7.4%. The returns have been better with the best and worst stocks but both of those have come with higher volatility.
These last two tables show the best 25 S&P 500 stocks so far in 2025 and the worst 25 stocks in the S&P 500. Based on the data above, stocks from these two tables tend to outperform the other 450 (or thereabouts) stocks of the index.
