Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

$JPMorgan (JPM.US)$, $Wells Fargo & Co (WFC.US)$ and $Citigroup (C.US)$Traders are confident as Bank of America kicks off the financial report season on Friday. These three stocks have risen more than 22% year-to-date, but the options market has shown almost no concern about the possibility of a bearish trend. According to compiled data, the hedging cost indexes of JPMorgan and Wells Fargo & Co stocks are hovering near their lowest levels since 2021, while Citigroup's hedging costs are below the annual average.

The largest banks in the US have passed the annual stress tests by the Federal Reserve, and many have increased dividends to shareholders. Currently, the banking industry is waiting for a 'discounted' version of a more stringent capital regulation proposal. According to the performance announced in late June by Jefferies Financial Group(JEF.US), the growth momentum of investment banking business is strengthening, increasing optimism about economic recovery, after a rise in interest rates had slowed the pace of deal-making earlier.

According to Betsy Graseck, an analyst at Morgan Stanley, Citigroup, JPMorgan, and Wells Fargo are the top picks for large-cap bank stocks. She believes that JPMorgan will accelerate share buybacks in the coming quarters, and Wells Fargo's net interest income prospects may also rise, while Citigroup's views on buybacks and revenue may become the focus. Graseck wrote in a report: "It is expected that the financial report and forward-looking comments will further confirm that the global capital market is still in the early stages of recovering from the decades-low relative to nominal GDP. Banks do not have "bold assumptions" about loan growth this year.

"Expectations that the global capital market is still in the early stages of a recovery from a decades-low relative to nominal GDP will further be confirmed by financial reports and forward-looking comments," wrote Graseck, adding that banks had not made "bold assumptions" about loan growth this year.

Regarding the volatility after the financial report is released, the options reflect more or less the same trend as the past financial reports. The market currently expects the stock price fluctuations of Wells Fargo & Co and$Morgan Stanley (MS.US)$to be the largest, with a potential increase or decrease of 3.4%, consistent with their average trend over the past eight quarters of financial reports.

As expectations grow for mild volatility in bank stocks, the overall market remains calm, with the Chicago Options Exchange Volatility Index reaching its lowest average level since 2017 in the first half of the year. More importantly, it is well known that July is usually a particularly calm month for the US stock market: in the past 15 years, the VIX index has reached its lowest daily average reading in July.

Following the expiration of options last time, the number of outstanding options for JPMorgan, Citigroup, and Wells Fargo fell sharply, indicating that positions are still light before earnings announcements. The volume of outstanding options for JPMorgan approached a 5-year low, the volume of outstanding options for Citigroup reached its lowest level since early 2022, and the volume of outstanding options for Wells Fargo approached its lowest level since January of this year.

Gerard Cassidy, an analyst at Royal Bank of Canada's capital markets, wrote in a report: "The situation for banks looks very favorable for the next 18 months. The Fed is expected to cut interest rates, which could begin to lower financing costs for banks, while the expansion of the US economy will help boost loan growth." The Royal Bank of Canada also believes that banks will return excess capital through share buybacks and dividends. The analyst said: "We continue to recommend that investors increase their holdings of bank stocks in their portfolios."

Editor / jayden