U.S. stocks pulled back on Monday following the best five-week stretch for the S&P 500 since 2020, according to Dow Jones Market Data.
The market’s gains have come so fast and so furious, that some on Wall Street are starting to worry that investors might be getting ahead of themselves as they price in aggressive interest-rate cuts by the Federal Reserve for next year.
Indeed, some see Monday’s pullback, which saw the S&P 500 SPX close down 0.5% at 4,569.78, as healthy, considering the magnitude of the rally. According to Dow Jones data, the S&P 500 rose 11.6% during the five weeks through Friday.
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“You need some profit-taking, you need some backing and filling. Otherwise, things get out of control,” said Steve Sosnick, chief strategist at Interactive Brokers, during a phone interview with MarketWatch.
“You need some days where people reassess, take a breather if necessary, and if they do, it isn’t so terrible.”
A look back at recent history shows five-week stretches of this magnitude are fairly rare. The last time the S&P 500 rose 12% or more during a five-week period was Dec. 4, 2020, when the index capped off a 13.1% gain. Before that, the S&P 500 rose 12.8% during the five weeks ending June 5, 2020, and a whopping 17.7% during the five weeks ending May 8, 2020, according to Dow Jones Market Data.
As for whether such a large advance during such a short time means the market is destined to head lower in the months ahead, that hasn’t generally been the case over the past 15 years.
During that period, the S&P 500 gained 12% or more during 11 instances. In each case, six months later, the index had moved higher still. Here’s a breakdown of this performance below.
| Date | S&P 500 Level | 5-Week % Change | 6-Month Performance % Change |
| 12/04/2020 | 3,699.12 | 13.12 | 14.35 |
| 06/05/2020 | 3,193.93 | 12.83 | 15.82 |
| 05/08/2020 | 2,929.80 | 17.73 | 19.78 |
| 04/24/2020 | 2,836.74 | 23.07 | 22.16 |
| 10/28/2011 | 1,285.09 | 13.08 | 9.20 |
| 08/14/2009 | 1,004.09 | 14.2 | 7.11 |
| 08/07/2009 | 1,010.48 | 12.72 | 5.51 |
| 4/24/2009 | 866.23 | 12.71 | 24.63 |
| 4/17/2009 | 869.60 | 14.94 | 25.08 |
| 4/09/2009 | 859.56 | 25.34 | 25.09 |
| 4/03/2009 | 842.50 | 14.61 | 21.69 |
But looking back further paints a more mixed picture. According to performance data stretching back to 1928, there have been 90 instances where the S&P 500 gained 12% over five weeks.
Exactly half of those — 45 — saw higher returns six months later. Between November 1999 and November 2001, there were four such streaks. Stocks were lower six months later each time, as investors grappled with a series of bear-market rallies that characterized the dot-com crash period, according to Dow Jones data.
To be sure, stocks tend to rise over time, and past performance has no bearing on what might happen in the future.
U.S. stocks finished mostly lower on Monday, with the Dow Jones Industrial Average DJIA falling 41.06 points, or 0.1%, to 36,204.44. The S&P 500 fell by 24.85 points, or 0.5%, to 4,569.78. The Nasdaq Composite COMP shed 119.54 points, or 0.8%, to 14,185.49.