A number of people have asked, so we wanted to provide a quick summary of how the S&P 500 has historically performed following State of the Union speeches by US Presidents since 2001.  Given that the speeches take different tones depending on the President and where each one was at in their term, not to mention the state of the economy, it’s hard to say that this speech has any real direct impact on the overall market.  Therefore, we would take the performance numbers with a grain of salt.

With that caveat, the one-week period stands out for its overall weakness, while the one-month period has been relatively strong.  In the week that has followed SOTU speeches, the S&P 500 saw an average decline of 1.0% with gains in just 6 of the last 17 years.  Regardless of who the President was, the S&P 500 has been down more often than it has been up.  While one-week returns have generally been negative, one-month returns have been much more positive.  Since 2001, the S&P 500 has seen an average gain of 0.74% (median: 1.16%) in the month after a SOTU speech with positive returns in all but four years.  Under President Obama, the gains were even stronger with the S&P 500 having a median gain of 3.16% and only one year where it was down a month later.  Thanks Obama!

With yesterday’s 0.67% decline for the S&P 500, the index ended a streak of 99 trading days without a decline of just 0.60% or more.  As shown in the chart below, that’s the longest streak on record!  If you needed further evidence that this market has been unbelievable lately, there you have it.

Another streak that’s just as — if not more — unbelievable is that the S&P 500 has now gone 310 trading days without experiencing back-to-back declines of 0.50%+.  Think about that — it has been 310 trading days dating back more than a year to November 2nd, 2016 (just before the election) since we had two days in a row of declines of just half a percent.

As shown below, the current streak of 310 trading days — which may actually be broken today — is double the length of the 2nd longest streak without back-to-back declines of 0.50%+.

We’ve been saying it for the last few weeks now, but we’ll say it again — when the market does finally experience a pullback, it’s going to feel exponentially more painful for investors because of the simple fact that we haven’t experienced any kind of meaningful pullback in so long.  And when emotions run higher than normal, it makes investors more eager to push the sell button.  This in turn can cause even bigger declines, and the feedback loop begins.

We’re already a couple of weeks into earnings season, but if you think it has been busy so far, you haven’t seen anything yet.  Using our popular Earnings Report Calendar, we screened the S&P 500 for companies scheduled to report earnings by date. With just over 1% of companies in the S&P 500 scheduled to report earnings today, it’s a quiet start to the week.  That slow pace won’t last long, though, as close to 6% of companies are scheduled to report earnings on Tuesday, and then even more companies are on the calendar for Wednesday and Thursday.  In fact, with 7.2% of companies in the S&P 500 scheduled to report on Wednesday, it is tied with next Thursday for the busiest day of the entire earnings season.

Not only are this Wednesday and Thursday notable for the number of companies reporting earnings, many of the S&P 500’s largest companies are reporting those days as well.  On Wednesday, both Microsoft (MSFT) and Facebook (FB) – two of the five largest companies in the S&P 500 – report earnings after the close, and then on Thursday after the close we’ll hear from Apple (AAPL), Alphabet (GOOGL), and Amazon.com (AMZN) – the 1st, 2nd, and 4th largest companies in the index based on market cap.  In total, on Wednesday we’ll hear quarterly results from companies representing 10.7% of the S&P 500’s market cap, and then on Thursday, we’ll hear from companies comprising 16% of the index’s market cap.  Needless to say, the results we get on those two days will go a long way in deciding the direction that equities take this week. Rest up!