S&P 500 Marks 100 Days Without 1.5% Drop, First Time Since 2018

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(Bloomberg) — US stocks continued their slog through the end of summer, but the S&P 500 Index just notched a resiliency milestone not seen in five years.

The benchmark for American equities closed for the 100th straight session without a drop of at least 1.5%. It’s had four losses of more than 1% in the two months since it peaked for the year, but otherwise daily swings have been muted to an extent not matched since 2018.

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Part of the resilience has come from optimism that the economy has withstood the worst of the Federal Reserve’s policy tightening. Also, investors are still channeling money into stocks. US exchange-traded equity funds saw a $13.4 billion net inflow in the week through Sept. 13, the ninth week of additions in the past 12, LSEG Lipper data show.

“It’s unusual, but there haven’t been reasons for big drops in the stock market,” said Thomas Martin, a senior portfolio manager at Globalt Investments. “Unless the Fed really surprises investors this week, there isn’t going to be a reason to reposition because we know rate hikes are nearly done.”

The S&P 500 ended Monday little changed and is down 1.2% in September. While gains have slowed since a torrid first half, investors haven’t been daunted by the highest Fed benchmark rates in more than two decades. 

Supporting sentiment, consumer spending remains strong and Americans are beginning to conclude that price pressures are receding. The S&P 500 index is up 16% in 2023 as investors await a key Fed announcement Wednesday. Economists surveyed by Bloomberg anticipate officials led by Chair Jerome Powell will hold rates steady and pencil in one more rate increase this year.

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Crude Complication

Of course, oil prices leaping to the highest since last year may make the Fed’s fight against inflation tricky. In remarks last month, Powell kept the door open to raising rates again if the economy doesn’t cool enough to keep the inflation rate slowing. 

The S&P 500’s September performance doesn’t bode well for the rest of the month. Over the past two decades, the market has typically seen its September peak on or around the 11th trading day of the month, which would be Monday, according to Jeffrey Hirsch, editor of the Stock Trader’s Almanac.

The average decline from mid-September through the end of the month has been about 2%, data from the Stock Trader’s Almanac show.

“We maintain our restrained outlook for the remainder of September and into October,” Hirsch wrote in a note to clients. “Inflation’s cooling trend is being challenged by rising energy prices and geopolitical concerns are numerous.”

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