Historical post-election market gains could lead the S & P 500 even higher by the end of the year, according to Ned Davis Research. Ed Clissold, chief U.S. strategist raised his year-end S & P 500 target to 5,725 from 4,900 . The new target suggests the broad market index can rise more than 4% from its current levels and would lead to a year-end gain of 20%. Although Ned Davis Research isn’t included in CNBC Pro’s Market Strategist Survey , when comparing the price targets across various Wall Street names, the firm has the second-highest forecast for the broad market index. Clissold considered three factors when re-evaluating his year-end target: earnings per share and price to earnings growth, pending rate cuts from the Federal Reserve and the presidential cycle. He noted that since the end of World War II, the S & P 500 has recorded a median rise of 4.7% in the second half of election years. .SPX YTD mountain SPX year to date “Stocks rally after [an] election year, especially if [the] incumbent wins,” Clissold wrote in a Thursday note. He added that the broad market is on track to post its second-best first half performance for an election year. Typically, the market trends weaker in the first half of election years, he said. “A potential explanation is that this is the first time since 1892 that both major parties’ nominees have occupied the White House, reducing uncertainty around primaries and potentially pulling year-end election relief rally returns forward,” Clissold said. In addition, the strategist raised his operating earnings per share growth forecast to 8.5% from 6.5%. He is also anticipating the Fed to begin cutting rates in December. The S & P 500 has gained a median of nearly 6% in the six months before the first rate cut, meaning a December rate cut could benefit stocks in the second half of the year, Clissold stated. While the strategist thinks “the positive cyclical story remains intact” going into the second half of the year, his concerns of narrow market breadth are overhangs on his optimistic outlook. “The rally has left valuations stretched, sentiment optimistic, and the market overbought,” said Clissold. “High valuations and narrowing leadership leave the market vulnerable for bigger drawdowns should the bullish fundamental/macro backdrop falter.” The S & P 500’s 14.5% year-to-date gains have largely come from high-flying technology names such as Nvidia and Meta Platforms. Nvidia has surged more than 150% this year, while Meta is up 40%. The S & P 500’s equal-weighted version, however, is up just 4% in 2024. With this in mind, he advised investors to “prepare for more defensive positioning” while maintaining an overweight position in equities. “The longer optimism remains high, the bigger the risk that it turns into complacency and leaves the market vulnerable to the next piece of negative news,” said Clissold.