A good first half is tough to match

The stock market just had its best first half of the year since 1999. Now what?

History suggests stock investors will make more money the second half of the year.

Since World War II, a big increase in the first half of a year has almost always been followed by more gains in the second half.

In the 68 years beginning with 1946, the S&P 500 index has risen 10 percent or more 23 times, according to data from S&P Dow Jones Indices. During those 23 years, the market rose the second half of the year 19 times. Eleven of those years, or nearly half, the S&P 500 rose at least 10 percent the second half of the year.

The best second half was in 1954, in the middle of the stock market's longest bull run. Stocks increased 26.2 percent July-December. The worst second half was in 1987. The "Black Monday" market crash was Oct. 19, and stocks fell 17.4 percent the second half of the year.

In years like this one, in which stocks have started with a gain of between 10 and 15 percent, the average second-half increase has been 9.4 percent.

Those numbers suggest that when a rally gets going, it keeps going.

Of course, past performance is no guarantee of the market's future, and investors face some hurdles in this year's second half. The Federal Reserve has helped stocks rally by forcing down interest rates. But the central bank is considering reducing that stimulus later this year. Also, concerns about the Chinese economy, the world's second-largest, have unsettled markets in recent weeks.

But the factors that drove the market methodically higher the first five months of the year remain: The housing market is strengthening. Auto sales are strong. Companies continue to earn record profits. Inflation and interest rates are ultra low. The economy is growing moderately and may pick up the second half of the year.

Source:  Steve Rothwell, Associated Press

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