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There more than 100,000 layoffs announced in January. Auto and credit card delinquency rates surged last year. In some parts of the country, a Big Mac costs $18.
It can and perhaps should be argued that none of those points are positive for the economy. However, domestic large-cap stocks didn’t get the memo. As of Thursday, Feb. 8, the S&P 500 is up 4.8% year-to-date and residing around all-time highs. Speaking records for the S&P 500, since it already hit one (actually a few) this year, 2024 will mark the 41st year in the past 67 that the benchmark U.S. equity gauge hit at least one all-time high.
For advisors and clients, the ongoing success of U.S. large-caps is noteworthy on multiple fronts. For starters, it can be a burden for active managers that are trying to keep fund rosters diversified. In what feels like a recurring theme, a small number of S&P 500 members did an outsized portion of the heavy lifting for the index last month.
On the other hand, the seemingly indomitable runs of the S&P 500 and the Nasdaq-100 Index (NDX) are catalysts for further adoption of passive investments, namely exchange traded funds.
Awesome Anecdotes on the S&P 500
Not to be too picky, but it took the S&P 500 awhile to break through the prior all-time high set in 2022 before ascending to 5,000 on Feb. 8.
“First, January 2024 saw the end of the seventh longest gap between S&P 500 all-time highs, ever,” according to S&P Dow Jones Indices. “More than two years—or 513 trading days—separated Jan. 19, 2024’s then record close and its prior record high, posted on Jan. 3, 2022. This wait ended 27 trading days earlier than the 540-trading day gap in the 1950s, and it ended significantly quicker than other waits between all-time highs dating back to the 1920s.”
More important than the time in between records is the extent to which the index achieved new highs last month – an impressive feat when considering January is short two trading days due to New Years Day and Martin Luther King, Jr. Day.
“January also hosted one of the longest consecutive all-time high streaks, ever,” adds S&P. “Amid investors’ positive reactions to macroeconomic data and better-than-expected corporate earnings, the S&P 500 closed at record highs for five consecutive sessions between Jan. 19, 2024, and Jan. 25, 2024. The streak ended some way short of the 11-day records (posted in the 1920s and the 1960s), yet the 5-day run ranked as the joint 29th longest streak for the index and the longest run since the benchmark rose for eight consecutive sessions around the end of October 2021.”
Fun Facts, But Not Necessarily Instructive
Obviously, time will tell how much more gas there is in the tank for the S&P 500. There’s roughly 11 months remaining in the year –a presidential election year to boot – so only time will tell where the S&P 500 winds up on an annualized basis.
That is to say the aforementioned data points, while important, aren’t by any means predictive. That’s important to remember when it comes to managing client expectations.
“We will have to wait and see if the S&P 500 continues to post record highs this year: predicting the future is difficult, and the last few years have served as a reminder that there are plenty of narratives (some telegraphed in advance, some not) that can drive the market’s direction. But with the S&P 500 up around 5 YTD on a price performance basis, history offers more than a glimmer of hope for the optimists,” concludes S&P.
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