The Stock Market's 8-Week Rally May Not Be Over Yet, According to History

💡 A strong 8-week stock market rally may not be over yet, according to historical data.

The stock market has just experienced one of its strongest 8-week runs ever, with the S&P 500 rising by 10% over the past two months. This surge has left many investors wondering if the rally will continue or if it's due for a pullback.

Historical data suggests that strong market rallies often continue for several more weeks before finally reversing. In fact, a study by J.P. Morgan found that the S&P 500 has averaged a 15% gain over the 12 weeks following a strong 8-week rally.

A Look at Past Market Rallies

One notable example of a strong market rally is the 2009 recovery from the global financial crisis. The S&P 500 rose by 25% over the 12 weeks following the market's low point, and then continued to gain for several more months.

A Look at Current Market Conditions

In the current market environment, the Fed's hawkish tone has been a major driver of the rally. With inflation still running above the central bank's target, investors are betting that interest rates will remain elevated for the foreseeable future. This has led to a surge in bond yields, with the 10-year Treasury yield rising to 4.8%.

A Look Ahead

While history suggests that strong market rallies often continue for several more weeks, it's impossible to predict with certainty what will happen next. However, one thing is clear: the market's current momentum will be difficult to sustain if inflation continues to rise.

What It Means for Investors