Is the S&P 500 Due for a Breather? What History Says

Core Viewpoint - The S&P 500 Index (SPX) has remained within 3% of its all-time high for over 90 trading days, marking a significant period of stability in the stock market, which historically tends to lead to underperformance in the following months [1][2][3]. Historical Performance Analysis - Since 1950, there have been eight instances where the SPX has maintained this streak for 90 days, with average returns showing a pattern of initial outperformance followed by underperformance over longer periods [2][3]. - The average return for the SPX after these streaks is 0.43% over two weeks, 0.16% over one month, 0.45% over three months, 2.92% over six months, and 7.33% over twelve months [4]. - The median returns are slightly higher, with 0.52% for two weeks and 4.04% for six months, indicating a tendency for modest gains [4]. Comparison with Typical Returns - In comparison to typical market returns since 1964, the SPX's performance after the 90-day streak shows a mixed picture, with average returns generally lower than the historical averages for similar time frames [6]. - The SPX has returned close to 12% during the current streak, which is in the middle range compared to past occurrences [6][9]. Individual Streaks and Their Outcomes - The last significant streak occurred in March 2017, where the SPX gained 14% over the following year after an initial pullback of 1.5% [7][9]. - Historical data shows that the longest streaks lasted up to 11 months, with an average duration of three and a half months [9]. Future Expectations - The SPX has historically underperformed after these streaks end, with average returns of -0.04% over two weeks and 6.37% over twelve months, suggesting a need for tempered expectations moving forward [10].