01.01.70
The sharp stock rally to kick off 2012 is eerily reminiscent of how the market started the previous two years.
Bulls are hoping the third time’s a charm.
Stocks surged at the beginning of 2010 and 2011, but those rallies petered out around late April before regaining their footing later each year. The difference in 2012 is this rally has been fast and furious, with cyclical stocks charging ahead, while the defensive names lag.
The S&P 500 set a new 2012 closing high on Tuesday, finishing at its highest level since July.
The index is up 7.1% this year. There have only been eight other years when the S&P 500 had a better year-to-date start than 2012, according to Howard Silverblatt, senior index analyst at S&P Indices. The most recent instance was 1987, when the index surged 16% in the early part of the year. Of course Black Monday ravaged stocks that October, but the index still eked out a 2% gain for the year.
Of those eight years Mr. Silverblatt cited, the S&P 500 finished a year down only once, in 1934. Six of those eight examples produced annual returns of at least 16%.
Source: Wall Street Journal (blog)