WEEKLY MARKET UPDATE 1/26/2024

The S&P 500 posted five consecutive days of new all-time closing highs before taking a breather on Friday as the market cheered a variety of goldilocks data (not too hot, not too cold) that indicated solid economic growth but without signs of inflation reaccelerating.  Therefore, the market continues to price in a soft economic landing and market implied probabilities for a rate cut from the Federal Reserve by March are around 50%.  Next week will be much busier as it will include Fed meeting announcements on Wednesday, January’s jobs report on Friday, and the fourth quarter earnings season really heats up with roughly 40% of the S&P 500’s market cap scheduled to report results (i.e. Apple, Microsoft, Alphabet, Amazon, Meta).

NEW ALL-TIME HIGHS

Last week, the S&P 500 posted new all-time highs (ATH) for the first time in just over 500 trading days and investors might be surprised to learn that such a period between stock market record highs was the sixth longest streak in history.  Per Ned Davis Research (NDR), long periods between all-time highs are actually quite bullish though.  For example, NDR found that stretches of more than a year without an ATH led to the S&P 500 outperforming long-term averages one, three, six, and 12-months later.  Furthermore, after finally hitting an ATH, one year later the S&P 500 was higher 13 out of 14 times by an average of +14% (per NDR).  The S&P 500 has risen 12 of the last 13 weeks, so a healthy pause would not surprise us, but generally all-time highs are bullish signals.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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