• Yesterday marked the end of the first year of the current bull market for the S&P 500 that began at the bear market lows on October 12, 2022.
• Year one of the current bull has been unspectacular with a gain near 22%, compared to the historical average over 40%, in part due to the shallow bear market in 2022 and above-average valuations then, which left less upside in a rebound. Sticky inflation and sharply higher interest rates certainly also played roles in slowing this bull.
• As we enter year two of the bull, market history tells us more gains lie ahead. Of the 12 “year 2s” since 1950, the S&P 500 has gained an average of 12.6% and was positive every time (see table below).
• A gain of this magnitude seems reasonable given: 1) The likely continued improvement in inflation as growth slows, which should keep the Fed at bay, 2) the potential for interest rates to move lower, supporting stock valuations, and 3) potential margin expansion from corporate America as those inflation pressures ease and new technologies bolster productivity.
• Key risks are geopolitics, a lasting recession, and further rise in interest rates.

_{Source: LPL Research, FactSet 10/11/23} 

_{Past performance is no guarantee of future results. All indexes are unmanaged and can’t be invested in directly.}

_{The modern design of the S&P 500 Index was first launched in 1957.}

_{Performance before then incorporates the performance of its predecessor index, the S&P 90.}