What’s next for ETFs after S&P 500 hits record high?

History suggests the stock market rally could have legs

Sumit Roy

S&P 500 index

After two years, including multiple near misses the past seven weeks, the S&P 500 finally clawed its way back to all-time highs, surpassing the previous high of 4,797 set in January 2022.  

A rising stock market is good for most exchange-traded funds. Equity ETFs, whether they directly track the S&P 500, tend to rise with the index, a positive for both investors and fund managers.  

On Friday, assets under management across all 2,350 US-listed ETFs hit a record $8.14trn. Of that, $6.4trn was invested in equity ETFs and $4.4trn was invested in US-focused equity ETFs specifically. 

The question now becomes where the US stock market goes from here? While nothing is certain, according to data from CFRA research, the S&P 500 tends to keep rising after exiting a bear market. 

Market Performance After Reaching All-Time High

On average, the index climbs 5.2% above its previous record high post-bear market before its first decline of 5% or more.  

However, the data - which looked at the period between 1946 through today - showed three occasions when the index rose less than 1% before selling off.  

On the other hand, in 1958, the S&P 500 surged as much as 22% above its previous high before the rally stalled, while in 1980, it jumped 7.4% before retreating.  

As always, past performance is no guarantee of what happens next, but it is a guide that can be helpful in envisioning the possible range of outcomes.  

As of midday Monday, the S&P 500 was trading around 4,883, or 2.4% above the previous all-time high from 2022.  

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