The spring/summer rally for the S&P 500 Index (SPX) has faded, but the pullback still leaves the market positioned to post one of its stronger calendar-year gains in decades. The obvious caveat: a lot can happen between now and Dec. 31. But for the moment, American shares reflect a robust bull run for the year to date.

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The question lingers about whether this year’s gains are a bear-market rally. One reason for considering that possibility: the market has yet to regain its January 2022 high. In an upcoming post I’ll take a closer look at that debate. But first, let’s put 2023’s rise into historical context.

The main takeaway: Few calendar-year rallies since 1950 beat the current rise, as the chart below shows. The S&P 500 is up 13.5% year to date through Tuesday’s close (Oct. 10), which is shown by the red line. That’s a dramatic reversal from last year’s steep loss (blue line).

This year’s rally is also sharply higher than the average 20-year change for the market (2002-2022), shown by the green line.

Comparing 2023’s results to date in the context of every calendar year since 1950 (gray lines) puts this year’s increase just below the 75^th percentile. In other words, 2023’s advance beats 75% of calendar year returns for the past seven decades. Not too shabby.

The question is whether this year’s pop is a temporary reaction to last year’s steep loss? In an upcoming post I’ll dig into that question. Meantime, it’s fair to say that a hefty dose of mean reversion remains in play.

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