Today's close put the finishing touches on the worst first half to a year for the Dow since the index was down 14.60% from January through June of 1970. The 14.44% decline for the Dow makes it the tenth worst first half since 1900. At right we highlight the second half performance of the Dow based on a number of first-half scenarios.
As shown, poor starts to the year are typically met with underperformance for the remainder of the year, although significant declines of 10% or more have seen an average gain in the second half that is slightly better than the average for all second halves. When the Dow has been down in the first half, it has averaged a gain of just 0.29% for the second half, with gains 57.5% of the time. Declines of 5% or more have actually averaged a loss of 1.29% for the rest of the year, while declines of 10% or more have averaged 4.36% in the second half.
The market really outperforms in the second half when it is up in the first half. The bigger the gains in the first half, the bigger the likelihood of gains in the second half. Unfortunately, we don't have those gains to help us this year.
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