The S&P 500 early Thursday flirted briefly with its first record close in more than two years, after resuming a rally that swept the large-cap U.S. benchmark higher late last year as investors rejoiced over the prospect of lower interest rates ahead.
The S&P 500
SPX
traded as high as 4,798.50 shortly after the opening bell early Thursday, topping its record close of 4,796.56 set on Jan. 3, 2022. It soon lost steam, trading off around 4 points, or less than 0.1%, at 4,778.
Through Wednesday’s close, it’s been 507 trading days since the last record finish for the S&P 500, according to Dow Jones Market Data.
So how jubilant should investors be once the index manages to close in record territory. There’s no pat answer, of course, but history has shown that gaps of at least a year between all-time highs have led to positive returns a year later, strategists Ed Clissold and London Stockton of Ned Davis Research noted in December. Based on data going back to 1928, the current streak without a record close is the sixth-longest, after 1954, 1958, 1980, 2007 and 2013 (see table below).
“Did the rally to new highs leave the market overbought and in need of a correction? Or was it a breakout to a new up leg? History sides with the latter,” wrote Clissold and Stockton.
As the NDR data shows, the S&P 500 has outperformed its long-term average one-, three-, six-, and 12-months later. The one-month returns, however, are not quite as strong, suggesting a short-term overbought
condition in some cases.
The S&P 500 has traded higher 13 out of 14 times in the year, or 252 trading days, after ending a gap of more than a year between records, with the exception coming in 2007. The median return is 13.4%. The mean return has been 14%, outpacing the mean for all one-year periods of 7.5%.
As noted returns 21 days out were positive just 71.4% of the time, the data showed. The mean return was 0.9%, still better than the mean for all periods at 0.6%, while the median return was 1.8%.
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