- The stock market is heading into a historically strong month of the year, Bank of America says.
- November is usually strong for stocks, with the S&P 500 rising 59% of the time since 1927.
- The bank gave some investment ideas to capitalize on bullish seasonal trends.
The stock market is heading into one of its best stretches of the year.
November has historically been among the best months for stocks — and there are a few areas where investors should concentrate on to capture the seasonal upside, analysts at Bank of America wrote note on Wednesday.
November and December are historically strong months for equity prices. Since 1927, the S&P 500 gained 59% of the time during November and rose by an average of 1%, according to BofA’s analysis.
BofA Global Research
The odds that November will be another winning month for investors go up when considering that stocks are in the first year of a new presidential cycle and that the S&P 500 is on track to finish October with strong gains, the bank said. When the S&P 500 gained in October during a presidential year, the index gained 92% of the time in November, analysts said.
Here are some of the bank’s investment ideas for investors looking for opportunities in the next month, based on historical returns:
- Consumer discretionary stocks. The discretionary sector has historically led stock returns during the month of November, BofA said. The sector has been up 80% of the time since 1927, with an average gain of 3.14%.
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Tech stocks. The Nasdaq 100 has been up 69% of the time in November, with an average gain of 2.47%.
Tech stocks within the S&P 500, meanwhile, were up 71% of the time in November with an average gain of 3.1%.
- Healthcare stocks. Since 1927, the healthcare sector has been up 83%, with an average gain of 2.52%.
- Industrial stocks. The industrial sector was up 80% of the time in November with an average gain of 3.02%.
- Small-cap stocks. The Russell 2000 has been up 70% of the time in November since 1927. The average gain for the index has been 2.64% for the month, analysts said.
Within the small-cap universe, tech, healthcare, and industrial stocks have had the largest average gains for the months of November and December, with all three sectors gaining more than 6% on average, analysts added.
The market is cruising at all-time highs, bolstered by unrelenting enthusiasm for AI. Just this week, three mega-cap giants have achived market cap milestones, with Nvidia hitting a $5 trillion valuation and Apple and Microsoft both crossing $4 trillio.
Investors were rattled earlier in the year by tariffs and concerns over the AI trade and the strength of the US economy, but they’ve shrugged off most headwinds as they move toward year-end. The S&P 500 is up 38.2% from its April low and up 17.6% for the year, carried largely by the frenzy for AI and optimism for future trade deals.
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