US stocks witness best election year since 1976

US stocks have posted an impressive election-year rally year-to-date (YTD) as investors remain hopeful that the rally will continue.

The S&P 500 has gained over 14% YTD, delivering its best first-half performance during an election year since 1976, as well as the second-best performance in an election year in its history, according to Dow Jones Market Data.

Investors were watching inflation and economic-growth data to gauge the Federal Reserve’s potential interest-rate path, as well as corporate earnings in the second half of this year.

However, the rally has “left valuations stretched, sentiment optimistic, and the market overbought,” according to analysts at Ned Davis Research.

A number of factors leave the US stock market vulnerable to a correction in the second half of the year, including corporate-earnings estimates, uncertainty around potential Fed rate cuts and November’s presidential election, and the limited scope for the market’s rally, MarketWatch reported, citing analysts.