Stocks move to record high – a historical perspective

Market Perspectives

January 19, 2024

Quick take

  • The S&P 500 just rose to a record high for the first time since January 2022.
  • This is the 15th time since 1950 that the S&P 500 has moved to a record high after not having done so for at least a year. The last occurrence was in 2016.
  • Following past instances, the S&P 500 was up 12 months later in 13 out of 14 occurrences, or 93% of the time, with an average gain of 14%.
  • The one negative outlier was the May 2007 signal, as a recession unfolded in 2008; this reiterates the importance of the business cycle and the ability of the Federal Reserve (Fed) to stick the soft economic landing which is now being baked into markets. 
  • Reviewing the periods where stocks went at least two years before making a record high, as has been the case recently, brings the sample down to six instances. The S&P 500 was higher 12 months later in five of those six occurrences, with an average gain of 13.1% (median 10.9%).
  • Like any historical study, this should not be used in a vacuum. However, it does suggest that making fresh highs after a prolonged period tends to be a positive sign.

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