Exploring post-crisis market trends of the S&P 500

Focusing on market dynamics, Julie Hyman of Yahoo Finance takes a deep dive into the historical trading patterns of the S&P 500 Index (^GSPC) following major crises, modeled by Lori Calvasina of RBC Capital Markets. In her analysis, she sheds light on how the index has navigated these periods, comparing past and current market climates.

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This post was written by Angel Smith

Video transcript

The performance of the S and P 500 in recent years bears a striking resemblance to the early two thousand.

Julie Hyman joins me now with a closer look at the connection between the two timelines.

Julie.

Well, this comes to us courtesy of Laurie Casino at R BC’s chief strategist there.

And basically what she has mapped out is the overlay of different time periods for the S and P 500.

What you see here is the bottom, the purple line is the post-tech bubble and after the 911 pandemic it’s blue and then the current quarter, uh uh sorry and then after the great financial crisis is the amber one here that we’re looking at as well .

So that’s our current, where we are today is the blue line uh that you’re seeing here and they’re basically normalized.

So if you all started with 100, what would the returns look like?

So it’s charting it at the top of the closest, uh what we saw after the tech bubble, except recently, we’ve seen more of an upward burst for the S and P 500 in this time period .

So the similarity has changed somewhat from that period to having even more performance now versus that sort of computational period of chasing that tech bubble that burst.

Such interesting type of layering here.

But when it comes to what happens next, she doesn’t necessarily, Josh thinks there’s more upside here.

That was where I would go in the end.

Laurie thinks, you know, looking at the charts, does she think the stock continues to move higher from here?

Well, her fair value estimate for the S and P 500 is actually 5,300.

So that’s where we are today below.

And on the same note, it looks at a number of different scenarios for the Federal Reserve.

She says, if things play out the way the market looks right now, with the Fed able to cut rates by the end of the year because things are in order, not seeing a re-acceleration of inflation, economic growth continues.

So that would be kind of her base script.

But she said we could see a worse-case scenario where inflation doesn’t go down where the Fed doesn’t.

And in that case, 5300 may actually be too high, which also suggests some sort of mean reversion if these two time periods are really similar, so this breakout is probably not warranted.

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