Stock Market Today: What History Shows Us About Second Half Performance

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The stock market today got the third quarter, and second half of the year, off to a strong start with all three benchmarks logging gains right out of the gate.

Shortly after the open, the Dow Jones Industrial Average jumped 104.61, or 0.70%, to 15,014.21. The Standard & Poor's 500 Index climbed 13.57, or 0.84%, to 1,619.85. The Nasdaq added 38.43, or 1.13%, to 3,441.68.

June's volatility was attributed to the Dow's meager 2.27% gain during the second quarter. Nonetheless, the blue-chip index turned in its healthiest first half of the year since 1999.

The Dow's best performer was Microsoft Corp. (Nasdaq: MSFT), up 20%, while International Business Machines Corp. (NYSE: IBM) was a drag, down 10%.

The S&P gained 2.36% in Q2, and enjoyed its best first half since 1998. Financials led the broad-based index, while utilities lagged.

The Nasdaq was up 4.15% for the quarter.

A notable trend expected to continue for the rest of the year is volatility. The CBOE Volatility Index, better known as the market's fear gauge, ended Q2 at 17, after hitting a 52-week high of 22.72 in the quarter.

Also expected to continue are market gains.

If history is a guide, equities could move higher over the remainder of 2013, according to
Sam Stovall, chief equity strategist at S&P IQ Capital.

Stovall told Yahoo! Finance investors should stick with stocks. Stovall cited the fact that every time since World War II that the S&P 500 was up in January and February, the market has posted a total-year return 26 of 26 times.

"And the average total return (under those circumstances) was about 24%," Stovall said. "So with us up about 14% on a total return basis for the first half, if history repeats itself, we could be up another 10% just to get to the average."

That means the S&P 500 could move up to around 1,775 by year's end.

This week, thin and choppy trading is expected. Interrupted by the July 4th holiday on Thursday, the real fireworks could occur Friday when the week ends with the crucial June jobs report, a key metric the Fed watches. The consensus is for 170,000 nonfarm payrolls in June, with the unemployment rate dipping to 7.5%.

Also of note Monday, interest rates on federally subsidized student loans doubled overnight, jumping from 3.4% to 6.8% after Congress failed to reach a deal. Unless lawmakers reverse the decision, the average college student borrower will have to shell out an additional $2,600.

Newsmakers in the Stock Market Today

Health care and biotech, standouts year-to-date, were in focus Monday, along with a number of upgrades and one acquisition:

  • Apple Inc. (Nasdaq: AAPL) added 2.53% after Raymond James upgraded shares to a "Strong Buy" with a $600 price target.
  • Best Buy Co. (NYSE: BBY) bounced better than 7% following a bullish "Outperform" rating by Credit Suisse. Up 144% so far this year, the brokerage firm named the big box retailer its single "best near-term idea."
  • Elan Corp. (NYSE: ELN) was up some 1% after Bloomberg reported Royalty Pharma, whose $6.7 billion takeover for the Irish pharmaceutical drug maker lapsed last month, is mulling a new bid for the company with a partner.
  • Nokia Corp. (NYSE: NOK) rose 3.85% after announcing plans to pay $2.2 billion to buy the entire Nokia Siemens Network (50% owned by Seimens).
  • Onyx Pharmaceutical Inc. (Nasdaq: ONXX) soared 51.68% after rejecting an unsolicited offer of $120 a share. The $8.7 billion bid came from Amgen Inc. (Nasdaq: AMGN). JPMorgan Chase & Co (NYSE: JPM) said the oncology drug maker, which put itself on the block, could fetch as much as $150. Potential suitors named are Bayer and Pfizer Inc. (NYSE: PFE).
  • Research in Motion (Nasdaq: BBRY) slipped almost 1% amid a trio of downgrades. In the wake of Friday's disappointing earnings report, Needham downgraded the BlackBerry maker to "Hold" from "Underperform." Morgan Stanley (NYSE: MS) downgraded shares to "Equal weight" from "Oveweight," and Deutsche Bank downgraded the stock to "Sell" from "Hold."
  • Steinway Musical Instruments (NYSE: LVB) jumped 15.51% after private equity firm Kohlberg & Co agreed to buy the famed piano maker, in business for 160 years, for $438 million. Kohlberg has begun a tender offer to purchase all Steinway outstanding stock for $35, a 15% premium to Friday's close.
  • Vivus Inc. (Nasdaq: VVUS) rose nearly 3% after announcing the initial availability of its weight loss drug Qsymia in thousands of certified retail pharmacies, ahead of the previously stated mid-July 2013 schedule. Before, it had only been available through a certified mail-order pharmacy network

For the best ways to invest in the stock market today, check out How to Play the New Normal: Spiking Volatility

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