- The S&P 500 has jumped 25% during this year’s record-breaking performance.
- The gain signals the potential for an 11% rise in 2022, said LPL Financial head market strategist Ryan Detrick.
- Such a gain next year would be better than average, he wrote in a Twitter post.
The S&P 500 has piled on 25% so far this year, and the gain likely sets up a better-than-average performance in 2022, according to the head market strategist at LPL Financial.
The broad market index’s run this year featured its first close above 4,700, with Monday’s session also marking an eighth straight finish at a record high and the longest winning streak since 1997. Its performance this year has pushed the market value of US stocks to more than $39 trillion.
In years the index has finished up by more than 25%, the following year has seen the S&P 500 close up by 11.6% on average, said Ryan Detrick, chief market strategist at LPL Financial, in a Twitter post on Tuesday. The index has also risen 12 out of 14 times in the year following a 25% buildup, or a rate of 85.7%.
“In other words, better than your average year of up 71.8% of the time and up 9.2% on avg.,” he wrote.
A boom in corporate profit has been the backbone of the gains, after earnings were largely beaten down as the pandemic unfolded in 2020.
For the third quarter, the index’s potential blended earnings growth rate of 39.1% will mark the third-highest, year-over-year earnings growth rate since 2010, according to data from FactSet released November 5. Through the end of last week, 89% of S&P 500 companies had released financial results and 81% had beaten analyst expectations for earnings.
In addition to gains next year, the S&P 500’s performance hints at a Santa Claus rally next month as well.
Tracing back 30 years, there have been only four other years that the S&P 500 was up more than 25% year to date during the month of November, said Detrick in another post on Twitter.
“Would you believe stocks where higher in December all 4 times?,” he wrote, tacking on the following list: