The S&P 500 Index is easily one of the most recognizable stock market benchmarks in the world of finance. Standard & Poor’s debuted their first equity index in 1923, although the S&P 500 as we know it today didn’t hit the street until 1957.
Professional money managers and self-directed investors across the globe reference this index regularly as it encapsulates the 500 largest publicly-traded U.S. companies, featuring growth as well as value stocks. In the exchange-traded universe, the State Street SPDR S&P 500 (SPY, A) boasts the reputation as both the oldest and biggest fund out there.
Here is a quick primer on the history of the S&P 500 Index, by the numbers:
The index has logged five full decades and a few years to spare on the side, spanning across both the best and worst times in our nation’s economic history. Below are the opening prices of the index at the start of each year:
The S&P 500 has a track record of posting negative annual returns in 14 instances over the last half-century, giving it a nearly 75% chance of turning in a positive year:
In terms of historical performance, the cumulative returns graph below demonstrates the monstrous run-up that the index has enjoyed since inception:
For those that are in it for the long-haul, the chart below showcases the trailing 10-year returns for the index, based on year-end prices:
Bull & Bear Markets
The index has endured nine bear markets in its history, which refers to declines of more than 20%. According to data compiled by JPMorgan Asset Management, the worst bear markets include:
When considering all bear markets in history since 1957, the average decline has been 35% spanning across an average duration of 14 months.
The index has also enjoyed a bull market after each correction, and as the table below highlights, the best stretches in history far outweigh the worst ones. The best bull markets include:
On average, bull markets have returned 176% across a span of 68 months.
The Best and Worst
Starting with daily returns, we highlight the most impressive as well as the most treacherous single-day sessions that the index has seen:
To this day, the single-worst session remains “Black Monday” in October of 1987 when unimaginable selling pressures permeated stock markets around the globe, starting with Hong Kong and spreading to Europe before finally hitting Wall Street. There is no single cause for the market crash that day, but many experts conclude that it was a terrible combination of computer trading, overvaluation, and illiquidity.
The chart below offers a weekly performance perspective, based on end-of-week returns:
Here are the best and worst months that the index has endured:
Lastly, the chart below covers the best and worst years that the index has seen:
Movement Per Session
Another way to analyze returns is to look at the volatility of the index across different time-frames. The pie chart below showcases the probability of the index moving a certain amount during the course of a single trading day:
Moving onto weekly returns, we see that there is a greater distribution of returns that fall in the 1%-3% movement range:
In terms of monthly returns, we see that there is an even greater probability of the index swinging more than 3%-5% over the course of four weeks:
Lastly, the annual pie chart showcases that the index has a tendency to swing more than 10% in either direction over the course of a full year:
Market Valuation Indicators
Below we highlight several different indicators that many rely on to gauge “fear” and “greed” levels in the market, starting with the coveted price-to-earnings ratio. Note that this P/E figure is based on the current price divided by trailing 12-month reported earnings:
Earnings-per-share is another popular valuation indicator; this figure is based on trailing 12-month earnings adjusted for inflation:
The chart below showcases the historical dividend yield of the index:
The S&P 500 Index has broken through 18 100-point barriers in its lifetime. Here are the number of times it has surpassed each milestone:
All data as of 1/1/2014
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Disclosure: No positions at time of writing.