What happens after a 20% or more up year in the S&P 500?
With only 19 trading days remaining in the year, the S&P 500 has increased by 26.8%. So, it seems that 2024 could finish with a gain of 20% or more.
Here is a table with all of the 20% or more up years, along with the following year's returns:
(right-click and open image in new tab to zoom in)
The Takeaway: Since 1950, there have been 19 instances where the S&P 500 finished the year with gains of 20% or more.
Of that, the stock market experienced positive returns in 15 out of the 19 years following a 20% or more gain, which is 78.9% of the time. Conversely, it was down in 4 out of those 19 years, representing 21.1% of the time.
On average, the return following a year with a 20% or more increase was 9.6%. In years that were up years, the average gain was 15.4%. In contrast, during down years, the average loss was recorded at -11.9%.
From the data, it’s more likely that we will see strength beget strength.
However, while looking at annual returns in the stock market won't predict what will occur in the following year, it can help us prepare for potential outcomes and provide a starting point for understanding the type of environment we may encounter in 2025.
