• 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.

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Index Definitions

  • 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.

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