- While we would not be surprised to see the S&P 500 stock price index pull back further from its all-time closing high achieved on September 2, 2021, keep in mind that bear markets are typically associated with significant economic disruption, which we do not anticipate occurring anytime soon.
- If anything, we think such dips should serve as reminders that maintaining a disciplined approach in all market environments should help investors stay on the path to achieving their long-term investment objectives.
The latest bull-market cycle began during the worst phase of the economic cycle, as is often the case. Many countries were locking down their economies as deaths from COVID-19 were rising in uncontrolled fashion in the Northeastern U.S. and throughout Europe. When it became clear that massive monetary and fiscal support was on its way, markets responded immediately in anticipation of a successful rescue effort.
What has perhaps been more surprising is the relentlessness of the global stock-market rally over the past 18 months, with the S&P 500 setting the pace. As illustrated in Exhibit 1, despite ongoing challenges—such as the repeated waves of new COVID-19 infections around the world; the persistent shortages of goods and labor; ever-surging inflation rates; and the imminent fading of government economic relief—the bull market has continued its advance. In fact, the S&P 500 Index managed to avoid even a minor dip of 5% until the last trading session of September, when it posted a 5.06% drop from its all-time closing high achieved September 2, 2021. It had been almost a full year since this measure of the stock market last recorded a drop of 5% or more.DOWNLOAD THE FULL COMMENTARY
- The S&P 500 Index is an unmanaged, market-weighted index that consists of approximately 500 of the largest publicly traded U.S. companies and is considered representative of the broad U.S. stock market.
- The S&P 500 Growth Index measures the performance of growth stocks in the S&P 500 Index.
- The S&P 500 Momentum Index measures the performance of securities in the S&P 500 Index that exhibit persistence in their relative performance.
- The S&P 500 Quality Index measures the performance of high quality stocks in the S&P 500 by quality score, which is calculated based on return on equity, accruals ratio and financial leverage ratio.
- The S&P 500 Value Index measures the performance of value stocks in the S&P 500.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding SEI’s portfolios or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts.
There are risks involved with investing, including loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. High-yield bonds involve greater risks of default or downgrade and are more volatile than investment-grade securities, due to the speculative nature of their investments.
Diversification may not protect against market risk. Past performance does not guarantee future results. Index returns are for illustrative purposes only and do not represent actual portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index.
Information provided by SEI Investments Management Corporation, a wholly owned subsidiary of SEI Investments Company (SEI).