Jul 1, 2021 - Economy

The incredible S&P 500

Illustration of a magician's hat with a line coming out of it.

Illustration: Aïda Amer/Axios

Give it up for the U.S. stock market. The S&P 500 has surged 14.4% from the beginning of the year through June 30, marking one of the strongest first halves of the year in history.

Why it matters: So far 2021 has been riddled with eye-popping moves in a handful of buzzy assets that grabbed everyone’s attention. And yet the stodgy U.S. stock market, propelled by booming earnings, has quietly delivered a fortune for investors.

Yes, but: None of those come close to having the influence of the stock market.

  • The S&P 500 alone consists of over $36 trillion worth of companies, according to S&P Dow Jones Indices analyst Howard Silverblatt.

By the numbers: The S&P has generated better returns only 16 other times since 1950, LPL Financial’s Ryan Detrick observed.

  • On average, it gained another 9.7% in the next six months.
  • And, it delivered positive returns in 12 of those 16 cases.
Graph showing S&P 500.
Data: YCharts; Chart: Axios Visuals

What they’re saying: "Strong equity markets tend to stay strong," Fundstrat Global Advisors’ Tom Lee tells Axios.

  • "This makes sense in today’s context given the robust economic recovery plus pent-up demand plus substantial corporate operating leverage. This is a formula for markets to surprise to the upside."

Be smart: Assuming history is indeed a guide, then the stock market could be due for a 10% pullback in the coming months.

  • All of that said, historical performance is no guarantee of future results.
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