Could the S&P 500 Make History?

The S&P 500 could do something this quarter it hasn’t done since the Great Depression. Yesterday, we looked at what happens after the S&P 500 is up five straight weeks; we also mentioned that after being down 10% for the year at the February lows, it is now green. Today, we’ll take a closer look at that reversal.

On February 11, 2016, the S&P 500 was down 10.5% for the year, but it has come all the way back to positive, and as of yesterday was up +0.4% for the year. Going back to 1928, only eight years have ever been down at least 10% and then finished in the green by the end of the year. Obviously, 2016 isn’t over yet and there is plenty of time for market moves in either direction; however, this statistic shows just how rare it is for a year to make a comeback after being down 10%.

Source: LPL Research, FactSet 03/21/16


Now, here’s the interesting part: The S&P 500 didn’t need a full year to do this round trip—it did it in one quarter! Should the S&P 500 close out the first quarter in the green, it would be just the second quarter since 1928 to be down more than 10% at one point and close higher. In fact, you have to go back to the fourth quarter of 1933 for the last time a quarter saw a reversal like this. Below are the largest quarterly reversals since 1928.

In conclusion, this type of volatility and a reversal of this magnitude are extremely rare, and in a word, historic.

Source: LPL Research, FactSet 3/21/16

Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

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The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

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