Do Fast Starts Mean Strong Years For the SPX?

The SPX may be in good shape this year

Senior Quantitative Analyst
Apr 3, 2024 at 8:45 AM
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The first quarter of 2024 is in the books, with the S&P 500 Index (SPX) registering a notable gain of 10.2%. It gained over 10% in the final quarter of 2023 as well, marking consecutive quarters of double-digit gains. This week, I’ll look at past instances of such occurrences to assess how stocks behaved going forward. Additionally, I'll examine the performance for the remainder of the year following big first-quarter gains and break down the returns to mirror the current environment.

Consecutive Double-Digit Quarters

After an 11.2% gain in the fourth quarter of 2023, the SPX gained 10.2% during the first quarter of 2024. Since 1950, there have been seven prior instances of the index having back-to-back double-digit gains. The table below lists those occurrences, as well as the subsequent returns.

Stocks tended to take a breather after two big quarters, averaging a loss of 0.92% over the next month, with less than half of these returns positive. The next three months were just over breakeven on average, including a big 12% loss over the three months after the second quarter of 1975. About 71% of the returns three months later were positive. The average return of 4.2% and 12.3% during the next six and 12 months, respectively, are close to typical.

SPX Quarterly Gains

Fast Starts, Fizzling Finishes

The table below summarizes what happens after the first quarter gained 10% or more. There have been 11 other instances since 1950. The momentum tended to continue into the second quarter, which averaged a 2.67% gain with 73% of the returns positive. Since 1950, the second quarter typically gained 1.96%, with 62% positive. The outperformance has been short-lived, as the rest of the returns out a year look typical.

SPX Quarterly Gains Table 2

Finally, I thought it was interesting that the big first quarter followed a big year for the SPX. The index gained 24% in 2023 before the 10% gain in the first quarter. There were three other times the SPX gained 10% in the first quarter after a 20%+ gain for the index the year before.

There’s only three data points, but the good news is that the SPX was positive in the second quarter each time, with an average return of 3.1%. The rest of the year was also positive each time, with an average return of 5.8%, which is lower than the typical rest of year return of 6.97% (see the table above).

SPX Quarterly, Yearly Gains


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