Curious what the S&P 500 is going to do for the rest of the year? Just look at how well it's done in 2023's just-completed first 100 days.
The S&P 500 returned 8.1% in its first 100 trading days of the year through May 25. And that's a bullish sign for what's coming next, says research from Jeffrey Buchbinder, strategist at LPL Financial.
"In general, strong starts tend to be followed by solid finishes," he said.
First 100 Days Beget More S&P 500 Strength
What's one of the best harbingers for solid gains in the back half of the year? A good first 100 days by the S&P 500 — like the ones we just got.
It's not just a theory. The S&P 500 has risen at least 7% in the first 100 trading days of the year 27 times since 1950. And in those years, the S&P 500 rose an impressive average of 9.4% in the rest of the year, LPL found. That's nearly double the average 5.4% gain in all years since 1950, including the years the S&P 500 didn't rise in the first 100 days.
It gets better. When the S&P 500 rises in the first 100 trading days, the odds of further gains are really good. Following strong starts, the S&P 500 rose in the balance of the year 88% of the time. The last time the S&P 500 jumped more than 7% in the first 100 days, 2021, it ended up rising another 13.6% that year.
"While we know there are no guarantees in this business, the consistency of this pattern over seven decades suggests it is likely to hold up again," said Buchbinder.
The Downside Of The First 100 Days
If there's any caution of the first 100 days, it's that so far a tiny group of Nasdaq giants are driving the S&P 500.
The S&P 500 would actually be down this year if not for the gains in just eight S&P 500 stocks. If you excluded the top eight S&P 500 stocks this year, the S&P 500 would be down 0.3% instead of being up nearly 8%, says Howard Silverblatt, index analyst at S&P Dow Jones Indices.
Some of the top runs are breathtaking. Computer chip designer Nvidia for instance is up more than 159% this year. That stock alone is driving roughly a third of the S&P 500's gains this year.
But the S&P 500's reliance on some Nasdaq giants is a bit concerning. The Nasdaq is up more than 20% this year "for just the fifth time in its history dating back to 1971," said Bespoke Investment Group.
The trouble is the Nasdaq doesn't fare so well in the first 100 days. The four other years the index rose 20% or more on its 100th trading day were 1975, 1983, 1986, and 1991, said Bespoke Investment Group. "In three of those years, the Nasdaq closed the year lower than it did on its 100th trading day," Bespoke said.
So except for perhaps the Nasdaq, the first 100 days bode well for the rest of the year.
Good First 100 S&P 500 Days? Expect More
Based on S&P 500
| Year | First 100 days | Rest of year return |
|---|---|---|
| 2023 | 8.1% | ? |
| 2021 | 11.7% | 13.6% |
| 2019 | 12.7% | 14.3% |
| 2017 | 7.9% | 10.7% |
| 2013 | 15.7% | 12.0% |
| 2003 | 8.1% | 16.9% |
| 1998 | 12.6% | 12.5% |
| 1997 | 14.3% | 14.6% |
| 1996 | 10.1% | 9.2% |
| 1995 | 15.1% | 16.5% |
| 1991 | 13.6% | 11.2% |
| 1989 | 14.9% | 10.7% |
| 1987 | 19.4% | -14.5% |
| 1986 | 14.2% | 0.3% |
| 1985 | 12.2% | 12.6% |
| 1983 | 17.7% | -0.4% |
| 1976 | 10.3% | 8.1% |
| 1975 | 32.1% | 8.1% |
| 1972 | 7.5% | -0.4% |
| 1971 | 7.9% | 7.5% |
| 1967 | 12.3% | 2.6% |
| 1964 | 7.6% | 7.0% |
| 1963 | 11.1% | 7.0% |
| 1961 | 14.0% | 8.0% |
| 1958 | 9.5% | 26.1% |
| 1954 | 16.6% | 24.4% |
| 1950 | 11.3% | 9.3% |
| Average | 13.1% | 9.4% |
Sources: LPL Financial
Follow Matt Krantz on Twitter @mattkrantz
