S&P 500 Record Highs Point Toward Strong Gains in 2024: Ned Davis Research
The S&P 500, one of the most closely watched stock market indices, is poised for another strong year of gains in 2024 if it hits a new all-time high, according to research from Ned Davis Research. The investment firm analyzed historical data and found that in years when the S&P 500 reaches a record high, the median gain for the year is approximately 15%. This statistic suggests that the stock market’s performance tends to be positively correlated with record highs.
Median Gain of 15%: Yearly Stock Market Records Predict Positive Returns
A noteworthy observation from Ned Davis Research’s study is that the stock market tends to post double-digit gains in years with record highs. This finding underscores two key characteristics of the market: that strength often leads to further strength, and that stocks typically don’t experience dramatic crashes when at all-time highs. While there are exceptions to this trend, such as the S&P 500’s 20% decline soon after hitting a record high in early 2022, the overall historical data supports the notion that the market continues to rise after reaching new records.
S&P 500 Inches Closer to New All-Time High
Currently, the S&P 500 is less than 2% away from hitting a new all-time high. If it manages to achieve this milestone in 2024, it could set the stage for another year of robust double-digit returns. As the index approaches this significant level, investors will be closely monitoring its progress and considering the potential implications for their portfolios.
Stock Market Strength: Record Highs Drive Further Growth
Historical data suggests that the gains could become even more substantial if the S&P 500 reaches multiple record highs throughout the year. According to Ned Davis Research, years with more than seven record highs have seen a median gain of 19%, while years with over 35 record highs have delivered a median gain of 25%. These figures indicate that continued strength and a series of record highs could propel the market to even greater heights in 2024.
Double-Digit Returns Expected as S&P 500 Nears Record High
Taking into account the strong historical performance associated with record highs, it is reasonable to anticipate double-digit returns if the S&P 500 achieves a new all-time high in 2024. Previous years, such as 2021 and 2017, saw the index reach a significant number of record closing highs and subsequently generated impressive returns of 27% and 19%, respectively. Should the market replicate this pattern in the current year, investors could potentially reap considerable gains.
In conclusion, the research conducted by Ned Davis Research reveals the positive relationship between the S&P 500 hitting record highs and subsequent market performance. While not a guarantee, the data suggests that record highs are a bullish signal rather than a bearish one. As the S&P 500 inches closer to a new all-time high, investors will be closely monitoring its progress and considering the potential for strong gains in 2024.
Analyst comment
Positive news: The S&P 500 is expected to have strong gains in 2024 if it reaches a new all-time high, according to research from Ned Davis Research. Historical data shows that in years with record highs, the median gain for the year is approximately 15%. This suggests that the stock market’s performance tends to be positively correlated with record highs. The market could experience double-digit returns if it achieves multiple record highs throughout the year. Investors will be closely monitoring the S&P 500’s progress and considering the potential for strong gains in 2024.
