Investors should brace themselves for another big move next year, according to an analysis of historical data from Bank of America. The S & P 500 is up 24.7% in 2024 and on track for its second straight year with a gain of more than 20%. Bank of America says such occurrences are rare. Strategist Michael Hartnett said in a note that the broad market index has only seen back-to-back annual gains of more than 20% four times in its history. What happened after those previous moves wasn't always positive. After rising 31% and 38% in 1927 and 1928, respectively, the S & P 500 lost 12% in 1929 and another 28% in 1930, Hartnett said. Following gains of 48% in 1935 and 28% in 1936, the benchmark lost 39% in 1937, though it rallied 25% in 1938. The benchmark also had a mild 3% gain in 1956 and lost 14% in 1957 after surging 45% and 26% in 1954 and 1955, respectively. The last time the S & P 500 posted back-to-back 20% annual gains was in the 1990s, soaring 34% in 1995 and 20% in 1996. Those gains were followed by rallies of 31% in 1997 and 27% in 1998. Hartnett noted that the "secret sauce" for the S & P 500 to avoid some of the sharp reversals seen before is a decline in Treasury yields. This can "catalyze further big equity gains, as occurred in 1997/98." The problem now is that yields have instead been rising in recent months, driven by new data showing a resilient U.S. economy. On top of that, many investors fear incoming President-elect Donald Trump will move forward with protectionist trade policies, which could drive inflation higher. Elsewhere Friday on Wall Street, Goldman Sachs initiated Flutter Entertainment with a buy rating, saying its U.S. profits can triple over the next three years. "We have built a new proprietary player cohort framework for Flutter's U.S. business that analyzes and forecasts the evolution of individual player cohorts in the U.S.," Goldman said in a note to clients. "Our new deep dive on cohort revenue dynamics points to U.S. revenue compounding at a > 20% CAGR and more than tripling US EBITDA over 2024-27E."
