If slow and steady wins the race, 2024 is off to a great start. Through the end of the first quarter, the U.S. stock market, as measured by the S&P 500, tallied its 15th best start to a year in its history. That kind of hot streak may seem to contradict my initial statement, but the index made those gains with only a single day posting a return of greater than 2%. In fact, February 22nd was the first trading day in over a year that the index went outside the bounds of +/- 2%. 

I think we all can understand why returns below -2% in a given day wouldn’t be desirable, but the reality is that when daily movements are subdued on both sides, returns tend to be well above average at nearly 18%!  

Data represents past performance. Past performance is no guarantee of future results. Table is for illustrative purposes only. Returns are based on S&P 500 Index for the period of January 1, 2001, through February 29, 2024. Source: Morningstar Direct.

Again, this may not seem as exciting as chasing high flying stocks to the moon, but when those companies’ stock prices come crashing back to earth, as we’ve seen with some recent media darlings, it’s typically the proverbial tortoise that wins the race.

More good news to consider is that, although it may seem intuitive that a hot start to performance may lead to a year end meltdown, history is again on our side to think that perhaps more good news is on the way.

In the table below you’ll see that since 1926 there are 17 years where the S&P 500 notched returns of 10% or more in the first quarter. Then, as you review what happened in the ensuing nine months of performance, you’ll see that there were just two years where the stock market posted a loss for the next three quarters. In only one year (during the Great Depression), were the losses enough to turn the whole year red.

Data represents past performance. Past performance is no guarantee of future results. Table is for illustrative purposes only. Returns are based on the S&P 500 TR Index from March 4, 1957, to March 31, 2024, and the IA SBBI U.S. Lrg Stock Tr USD Index from January 1, 1926, to March 4, 1957, unmanaged indexes that are generally considered representative of the U.S. stock market during each given time period.  

However, before you conclude that a happy ending is in sight, even with the past as a guide for what may come, nothing is guaranteed. We’re still collectively navigating an economy that may not have reached a Goldilocks zone between being too hot (strong, but high interest rates) and too cold (weak, but with rates being cut) and the story coming from the Federal Reserve has not yet been finished.

Beyond concerns about interest rates, another major event is on the horizon: the presidential election in November.  While voters may have assumptions about what may happen in equity markets if one side or the other is elected (in the presidency, as well as in the House and Senate) when it comes to stock and bond markets the impact is far less than most realize. (Spoiler alert, markets usually go up.)

As the year continues, know that our team is available to discuss questions about market conditions and their impact on your personal situation.

The information provided in this article is intended for Carlson Retirement Plan Services plan participants. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.