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It’s Been a Big Market Rally – What’s Next?

February 23, 20241 Min Read
February 23, 2024
1 Min Read
market rally

Michael E. Schroer, CFA



The S&P 500 has risen in 14 of the 15 weeks since October 27, 2023. What’s been the historical pattern of returns after such a significant increase in stock prices over such a short period?

The S&P 500® has risen in 14 of the 15 weeks since October 27, 2023. From the end of October 2023 through the end of January of this year, the index has posted a price gain of 15.5%. What’s been the historical pattern of returns after such a significant increase in stock prices over such a short period?

Surprisingly, a sharp move up in stocks over a 3-month period has often been followed by further gains. The table below uses monthly data from the end of 1959 through the end of January 2024, with the first column showing typical price changes for the S&P 500 over all 12-month periods. The second column shows price change data after a gain in the S&P of more than 15% over the preceding 3-month period. As the table illustrates, the average and median 12-month returns following a strong 3-month period are above the average for all periods, as is the probability of a positive return.

Data from 12/31/1959–1/31/2024
1 Past performance is not indicative of future results.
Source: Bloomberg

The rally that began last October was accompanied by a strong rally in bonds as well, as 10-year Treasury bond yields tumbled. The third column in the table above shows what happened to stocks after a gain of more than 15% over a 3-month period and a decline in bond yields over the same period. As the table shows, the average and median returns for stocks going forward have been even stronger, and the market has never experienced a decline in price over the next 12 months under such conditions.

A number of caveats are in order. The periods when the stock market gained 15%+ and bond yields declined over the same period account for only about 2% of the months since 1960, so the statistical significance of this data is not robust. In addition, there has been short-term volatility in stock market prices that can’t be ignored during many of these periods, even when overall 12-month returns have been favorable. Finally, a significant increase in bond yields or geopolitical risks may present meaningful headwinds for the stock market.

Nevertheless, history suggests that the sharp move in stock prices that we’ve experienced over the past 3 months isn’t necessarily a precursor of future price weakness but may rather be supportive of further gains.

Michael E. Schroer, CFA



The S&P 500 has risen in 14 of the 15 weeks since October 27, 2023. What’s been the historical pattern of returns after such a significant increase in stock prices over such a short period?


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