History shows the S & P 500 has a strong full year when it rallies more than 7% — let alone this year's near 8% — over the first 100 trading days, and that pattern should repeat itself in 2023, according to Ryan Detrick, chief market strategist at Carson Group. Thursday marks the 100th trading day of the year. When the S & P 500 has risen more than 7% over the first 100 trading days in an average year going back to 1950, the index rallies another 9.4% over the balance of the year, for a total annual return of 23.6%. By comparison, the S & P 500 has gained an average of 9.8% annually since its inception in 1928, according to Investopedia . The year 2023 hasn't been a smooth ascent, with the index at one point forfeiting all its year-to-date gains as prices retreated during the banking crisis in March. This year should end no differently than others when the index rose 7% or more during the first 100 trading days, Detrick said, despite concern the economy could tip into a recession, denting corporate profits. Investors should put more weight on hard data such as building permits and housing numbers that show continued economic strength, rather than sentiment polls and other soft indicators showing weakness, he said. The economy is finding firmer footing, and "we just don't see these recessionary signals," Detrick said. "You couple it with inflation coming back to Earth, the Fed nearing the end of the interest rate hiking schedule [and] there's some dominoes that are laid out there that are set and ready to go." Detrick is continuing to recommend overweighting stocks, as he has since the start of the year, which at the time he said prompted others to look at his team members "like we have three eyes." Heading into the second half of the year, Detrick recommends watching small-cap and financial stocks. He said they could rally after recently underperforming, so long as the economy skirts a recession. The Russell 2000 Index of small-cap stocks has fallen 0.8% so far this year, while the S & P 500 Financial Index has slumped 7.4% year to date. "Stocks lead the economy," Detrick said. "We wouldn't be surprised if the stock market is sniffing out potentially better economic data the second half of this year, opening the door for better earnings."
