U.S. Stocks Have Had Few Years Start as Well as 2018 HasBy
The equity rally greeting investors in the new year is reaching into uncharted territory. That isn’t necessarily great news.
Up every day and reaching a record each time, the S&P 500 just did something unprecedented. According to Sundial Capital Research, no year has ever begun with consecutive 0.5 percent gains in the S&P 500, each to fresh 52-week highs. With the advance approaching 2 percent over three days, the benchmark is on course for the best start since 2013.
More impressive is the performance of tech stocks, 2017’s biggest winner and a group that some worried could be vulnerable to profit taking as fund managers rotated to the previous year’s laggards. Instead, the Nasdaq 100 has jumped 3 percent, the strongest rally to start a year since 2003.
“Just when we thought all of the feel-good, bullish scenarios couldn’t persist, 2018 has begun with yet another one,” Frank Cappelleri, a senior equity trader at Instinet LLC, wrote in a note to clients.
How long will it last? According to Sundial, the stock market may face some short-term setbacks if history is of any guide.
Three other years started on almost as good a note as 2018 has. In 2010, the S&P 500 managed to rise for a few more sessions before suffering an 8 percent retreat through mid-February. A similar breakdown occurred in 1945 and 1959 as well.
“The overall pattern is some weakness over the shorter-term, with further immediate gains usually being given back,” said Jason Goepfert, president of Minneapolis-based Sundial.