History suggests the S&P 500 could surge this summer, but some Wall Street analysts expect the stock market to undergo a correction in 2024.

that much S&P 500 (^GSPC 0.02%) It closed higher on Friday, May 24, marking its fifth consecutive week of gains. The index, a barometer of the U.S. stock market, is up 11% so far this year, hitting more than 20 record highs in the process. But history suggests momentum will continue through the summer months of June, July and August.

Here’s what investors need to know:

The S&P 500 has historically been higher through June, July, and August.

The S&P 500 is up 234% over the past decade, for an average annual gain of 12.8%. During that period, the index generally posted positive returns for 11 months of the year, with the exception of September, as seen in the chart.

Average price return (excluding dividends) for the S&P 500 each month over the past 10 years.

As you can see from the chart, over the past 10 years, the S&P 500 has averaged a 1% return in June, followed by an average return of 3.1% in July and 0.3% in August. Simply put, history shows that the U.S. stock market can be on the rise throughout the summer.

Of course, past performance is no guarantee of future results, so investors should never make assumptions about the S&P 500 in any given month. Instead, investors should focus on long-term returns because stock markets are more predictable when measured in decades.

Warren Buffett commented in his 1993 shareholder letter: “In the short term, the market is a voting machine – that is, it reflects a voter registration test that requires only money, not intelligence or emotional stability. But in the long term, differently, the market is a weighing scale.” In other words, stocks may be irrational in the short term, but fundamentally sound companies are bound to perform well in the long term.

Some Wall Street analysts warn that the stock market is heading for a correction.

Ultimately, whether the S&P 500 rises or falls will depend on macroeconomic fundamentals that affect corporate financial results. Stock markets are currently suffering from stubborn inflation and high interest rates, which could slow economic growth and make corporate earnings worse than expected.

This possibility is especially troubling because the S&P 500 is already relatively highly valued. The company currently trades at 20.5 times forward earnings, a premium to its 10-year average of 17.8 times earnings, according to FactSet Research. If earnings grow more slowly than expected in future quarters, the index could fall sharply and Wall Street has high expectations.

Analysts expect S&P 500 companies to grow earnings by 11.4% in 2024, up from 0.5% in 2023. They also expect revenue growth to accelerate to 14.2% in 2025. Stock prices could already plummet if actual results are lacking. High. Not surprisingly, some Wall Street analysts believe a stock market correction is imminent.

The S&P 500 is currently trading at 5,304. Evercore and Morgan Stanley The index set its year-end targets at 4,750 and 4,500, respectively. These estimates imply declines of 10% and 15% respectively. The most negative thing is JP Morgan ChaseAnalysts have set a year-end price target for the S&P 500 at 4,200. This would mean a 21% decline, which could put the index in a bear market.

My advice to investors is twofold. First, expect positive results over the summer (and the rest of the year), but be prepared for a downturn. While it always makes sense to limit your stock purchases to outstanding companies trading at reasonable valuations, it’s especially important to follow that rule in the current market environment.

Second, look at drawdowns and aim for long-term returns. Whatever happens in the coming months, remember that the S&P 500 has returned 12.8% annually over the past decade, and similar results (perhaps a few percentage points lower) are likely to occur over the next decade.