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Since October, Wall Street has been on a winning streak, defying concerns about various economic factors, especially high inflation and high rates. The S&P 500 logged its best first quarter since 2019. The index was up 10% in the first quarter of 2024.

The index has also surged by 25% over the past five months, leading some investors to question if this rapid rise is sustainable. However, historical data shows that such strong momentum tends to continue, with the S&P 500 usually higher 12 months later in the vast majority of cases.

However, stocks wavered to start Q2 as an interest rate cut by the Fed may come later than anticipated before. The yield on the benchmark 10-year Treasury rose to around 4.38% on Apr 2, hovering at its highest levels of 2024. Hotter-than-expected manufacturing readings, which came alongside increases in prices paid, have led to doubts that the Fed will cut rates in the first half of the year.

What Lies Ahead of S&P 500 ETFs?

Despite concerns about overvaluation, various sectors have seen substantial gains in Q1 of 2024. Moreover, this rally isn't limited to specific sectors as six of the 11 S&P 500 sectors have gained 20% or more over the past five months. The broader market rally extends beyond sectors typically associated with innovation like artificial intelligence. The U.S. economy too has been showing surprising resilience.

What Does History Say?

Since 1950, there have been 30 five-month winning streaks in the S&P 500, including the most recent one. In all but two of the prior 28 cases, the S&P 500 was higher 12 months later, with an average gain of 12.5% and a 93%-win rate. This compares to a 9.0% average one-year return with a 74%-win rate, a Yahoo Finance article noted.

The average historical return is 1.0% one month after a five-month winning streak with a 76%-win rate — versus a 0.7% average gain and 61%-win rate over all one-month periods in the last 74 years.

Year-End S&P 500 Targets Getting Continued Boost from Analysts

Analysts, including Oppenheimer's John Stoltzfus, are optimistic about the market's outlook, as quoted on Yahoo Finance. Stoltzfus predicts the S&P 500 could reach 5,500 by year-end, citing positive earnings, economic resilience, and bullish sentiments.

Other analysts have also raised their targets, suggesting continued bullish sentiment among market observers. UBS and Bank of America follow Oppenheimer with the price target of 5,400, followed by RBC Capital and Barclays (target 5,300).

While concerns about a potential bubble persist, many strategists argue that the market's current rally is aided by broad-based strength across sectors and styles, rather than speculative excesses. Plus, Fed Chair Jerome Powell reiterated the Fed will likely cut interest rates this year amid inflation's "bumpy" path downward. This comment has restored investors’ confidence to some extent on Apr 3, 2024.

ETFs to Play

Against this backdrop, below we highlight a few S&P 500-based ETFs that could be bought on the current dip. These ETFs are likely to gain in the coming days.

iShares Core S&P 500 ETF (IVV - Free Report)

The underlying S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market. The Zacks Rank #1 (Strong Buy) fund charges 3 bps in fees.

Vanguard S&P 500 ETF (VOO - Free Report)

The underlying S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market. The Zacks Rank #1 fund charges 3 bps in fees.

iShares S&P 500 Growth ETF (IVW - Free Report)

The S&P 500 Growth Index measures the performance of the large capitalization growth sector of the U.S. equity market. The Zacks Rank #2 (Buy) fund charges 18 bps in fees.

iShares S&P 500 Value ETF (IVE - Free Report)

The S&P 500 Value Index measures the performance of the large capitalization value sector of the U.S. equity market. The Zacks Rank #1 fund charges 18 bps in fees.

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