Much like last year, the Standard & Poor 500 (SPX) has continued its Bull Run in 2014. The S&P 500 has so far hit record highs on 49 occasions this year and boasts a year-to-date return of 12%. Also, the index has outperformed the Dow Jones Industrial Average's (DJI) year-to-date return of 7.4%, but is shy of NASDAQ Composite's (.IXIC) 14.1% gain so far this year. Following a 6.1% gain in the first half of this year, the index is up 5.6% so far in the second half.
The gains this year have come despite international concerns, which were weathered by strength in the domestic economy. In fact, the S&P 500 had started 2014 with three straight declines, which earned it the unfortunate feat of its worst start to any year in about 10 years. However, domestic events such as strong GDP numbers, improving labor market and Fed's assurance about the economy have helped S&P 500 stay in the green and keep hitting record highs.
S&P 500 Performance in 2014
Month
Returns (%)
January
-3.6
February
4.3
March
0.7
April
0.6
May
2.1
June
1.9
July
-1.5
August
3.8
September
-1.6
October
2.3
November
2.5
December*
0.2
1H2014
6.1
2H2014*
5.6
*Return as of Dec 19
Following a robust Bull Run in 2013, benchmarks began 2014 on a sour note. Emerging market concerns, China's dismal economic data and finally the Fed taper dealt severe blows to the market in January. However, right after the dismal start, S&P 500 rebounded strongly in February with strong gains. S&P 500 continued its surge, tackling the Russia-Ukraine crisis.
However, the positive run was halted in July, when the S&P 500 declined 1.5%. Escalating geopolitical tensions including the ones in Gaza, Ukraine, Malaysian Airlines passenger jet being shot down, and the Eurozone banking system unnerved investors. The rebound came again in August, but S&P 500 ended with losses again in September, largely due to disappointing data from China and the Eurozone.
The S&P has since then been on the winning side. Ebola scare and a slump in oil prices caused trouble for the benchmark till mid-October. On Oct 15, S&P 500 was inches away from entering a correction. However, the bulls took hold of the market thereafter, negating talks of correction banking on strong third quarter earnings numbers. Meanwhile, the Fed ended its asset repurchase program, while continuing with low interest rates.
