Image Source: Pixabay

Friday marked the 265th day of the year, meaning there are just 99 days left in what still seems like a new year. Heading into the home stretch, the market certainly looked tired as stocks erased much of the gains they posted in the late spring/early summer rally. If history is any use, though, equity performance in the final 100 days of the year tends to be positive.

In the top chart below, we show the S&P 500's performance during the last 100 days of the year dating back to 1945. For each year where the market was up over 10% heading into the last 100 days, we colored the bars dark blue.

The overwhelming majority of the time, the S&P 500 traded higher during the last 100-day homestretch, but there were some big exceptions, notably 1987 (-22.7%), 2008 (-25.2%), and 2018 (-14.4%). In 1987, the S&P 500 was up 31% heading into the last 100 days. In 2008, it was down 18% heading into the last 100 days. In 2018, it was up 9% before the plunge. In other words, a large plunge could come at any time.

Even taking the large plunges described above into account, the S&P 500's median gain in the last 100 days of the year has been a gain of 4.1%, with positive returns 78% of the time, and for years when the S&P 500 was already up 10%, the rest-of-year returns are nearly identical.

So as we get ready to wrap up 2023, the wind is at the market's back. Although just because the winds are favorable, it doesn't mean the boat still can't spring a leak.

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