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The stock market is headed for a historically strong month of the year, Bank of America says.
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November is usually strong for stocks: the S&P 500 has risen 59% of the time since 1927.
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The bank gave some investment ideas to take advantage of upward seasonal trends.
The stock market is entering one of its best stretches of the year.
November has historically been one of the best months for stocks, and there are some areas investors should focus on to take advantage of the seasonal rally, Bank of America analysts wrote in a note Wednesday.
November and December are historically strong months for stock prices. Since 1927, the S&P 500 has gained 59% of the time during November and is up an average of 1%, according to BofA analysis.
The odds of November being another winning month for investors increase considering stocks are in the first year of a new presidential cycle and the S&P 500 is on track to finish October with strong gains, the bank said. When the S&P 500 won in October during a presidential year, the index won 92% of the time in November, analysts said.
Here are some of the bank’s investment ideas for investors looking for opportunities in the coming month, based on historical returns:
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Consumer Discretionary Stocks. Historically, the discretionary sector has led equity returns during the month of November, BofA said. The sector has grown 80% of the time since 1927, with an average profit of 3.14%.
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Tech Stocks. The Nasdaq 100 is up 69% of the time in November, with an average gain of 2.47%.
Meanwhile, technology stocks within the S&P 500 rose 71% of the time in November with an average gain of 3.1%.
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Healthcare Actions. Since 1927, the healthcare sector has increased by 83%, with an average profit of 2.52%.
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Industrial actions. The industrial sector rose 80% of the time in November with an average gain of 3.02%.
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Small Cap Stocks. The Russell 2000 has risen 70% of the time in November since 1927. The index’s average gain has been 2.64% for the month, analysts said.
Within the small-cap universe, technology, healthcare and industrial stocks have had the largest average gains during the months of November and December, with all three sectors gaining more than 6% on average, the analysts added.
The market is reaching all-time highs, driven by relentless enthusiasm for AI. Just this week, three mega-cap giants have reached market capitalization milestones: Nvidia reached a valuation of $5 trillion and Apple and Microsoft surpassed $4 trillion.
Investors were rattled earlier in the year by tariffs and concerns about AI trade and the strength of the U.S. economy, but have shrugged off most of the headwinds as the end of the year approaches. The S&P 500 is up 38.2% from its April low and 17.6% for the year, driven largely by the AI ​​frenzy and optimism over future trade deals.
Read the original article on Business Insider