Exploring the S&P 500’s post-crisis market trends

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

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This post was written by Angel Smith

Video Transcript

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

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

Julie.

Well, this comes to us courtesy of Laurie Casino over at R BC head strategist there.

And basically what she’s mapped is overlaying different time periods for the S and P 500.

What you see here is the bottom line, the purple line is the post tech bubble and post 911 post pandemic is blue and then the current quarter, uh uh excuse me and then post great financial crisis is the amber one here that we are seeing as well.

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

So if you all started at 100 what would returns look like?

So she’s mapping it on top of most closely, uh what we saw post the tech bubble, except recently, we’ve seen more of a breakout to the upside for the S and P 500 in this period of time.

So the resemblance has sort of diverged from that period to have even more out performance now versus that sort of reckoning period of following that tech bubble bursting.

So interesting sort of layering on here.

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

She uh that was where I was gonna go to the bottom line.

Laurie think, you know, looking at the charts, does she think the stocks keep moving higher from here?

Well, her fair value estimate for the S and P 500 is actually 5300.

So that’s below where we are today.

And in the same note, she looks at sort of different scenarios for the Federal Reserve.

She says, if things sort of unfold as the market now seems to be expecting with the fed able to cut rates by the end of the year because things are OK, not seeing a re acceleration in inflation, economic growth continues.

Then that would be sort of her base case scenario.

But she said we could see a worse scenario where inflation doesn’t come down where the fed does not cut.

And in that case, 5300 might actually be too high, which also suggests sort of a reversion to the mean if these two time periods are indeed similar that this breakout is maybe not justified.

Josh