This week saw more positive news for equity bulls as data continued to show economic expansion and subdued inflation while the release of the Federal Reserve’s minutes showed that members were hesitating over future interest rate increases. The result was the continuation of the year-end rally producing the S&P 500’s biggest 11-day rally in a decade. Since their Christmas Eve swoon, equities have been on an upward trajectory, erasing nearly half of the 4th quarter correction which came within a percentage point of ending the longest U.S. bull market on record.
The S&P corrected by 19.25% during the 4th quarter. Since Christmas Eve the index has jumped by 10.55% (as of 01/10).
To fully recapture the loss of the index, the return would need to be 23.84%:
While the S&P 500 Index just recorded its first five-day win streak since September on Thursday, recent history has shown that the market likes to retest their lows before continuing higher. Since 2015, significant lows have been revisited in about three to six weeks. This would put the hypothetical move to the test during the busy earnings season which kicks off next week.
Disclosure: This Commentary represents a review of topics of possible interest to Pennsylvania Trust’s clients and is not personalized investment advice. It contains Pennsylvania Trust’s opinions, which may change following the date of publication. Information obtained from third-party sources is assumed to be reliable but is not guaranteed. No outcome – including performance – is guaranteed, due to various uncertainties and risks. This document is not a recommendation of any particular investment. Investment decisions for clients are made on an individualized basis and may be different from what is expressed here. Past performance is no guarantee of future results.