One of the most remarkable aspects of the past six months has been the lack of a significant pullback.  The S&P 500 has not seen a 5% pullback since October, and since the start of the year, the most it had fallen from a high was 4.23% from mid-February to March 4th. Besides that and another smaller 4% pullback in May, it has been a one-way trip higher.  Looking back through the history of the S&P 500, there are not many other years in which the index went the entire first half without at least a 5% pullback.  Below we show the chart of the S&P 500 for each of the 14 years that, like this year, did not experience a pullback of at least 5% in the first half. . As shown, six of these (highlighted in green)—1954, 1958, 1964, 1993, 1995, and most recently 2017—actually did not see a 5% or larger pullback in the second half of the year either.

As for the other years, the S&P 500 did generally tend to move higher for at least part of the second half, but there have been a range of declines.  The year with the largest decline in the second half was 1986 when the index fell 9.42% in September. And that was after a 7.53% decline shortly after the midpoint of the year in the first two weeks of July.  The 1959 occurrence similarly saw a 9.17% decline from August through September.  While it did not necessarily all happen within the second half of the year, the declines in the final days of the 1961 occurrence actually marked the beginning of a bear market that ultimately would see the S&P 500 fall 23.6% from its late 1961 peak.  Click here to view Bespoke’s all of Bespoke’s premium membership options and to sign up for trial.

Today marks the last day of what was a strong quarter and first half for the S&P 500. The index is on pace to notch a 14.33% gain in the first half of 2021 which, behind the 17.35% rally in 2019, marks the second-best first half of a year since 1998.  So does a strong first half mean that investors will take some money off the table on this final day? In the charts below, we show the average percentage change from the prior close for the S&P 500 on the final day of the quarter/half going back to 1983.  Generally, across the last day of a quarter or a half (last day of Q2 or Q4), the S&P 500 tends to move higher for most of the session, but the final hour of trading typically sees that move get erased bringing the index down to the flatline on the day. Taking a more specific look at the last day of Q2 or the first half, the S&P 500 is usually pretty flat in the morning before taking a leg higher in the mid-afternoon. Granted, as with other quarter ends, the index tends to reverse lower at the end of the day although it finishes more solidly in the green.

With such a big move higher so far this year, we also wanted to take a look at just the years in which the S&P 500 was up double digits through the first half of the year.  As shown in the second chart below, the standard performance in those years is a bit different with a decline in the morning but a rebound in the early afternoon. We would note though, the occurrence from 1999 weighs heavy on the average.  On that day, the Federal Reserve hiked rates a quarter-point but took a dovish stance with respect to rate increases on the horizon.  That led the S&P 500 to go from a nearly 1% decline at the day’s lows to an over 1.5% gain by the end of the day.  As such, excluding that one occurrence in 1999 shows an intraday pattern that is more similar to the norm for all quarter ends with a drift lower in the final couple hours of trading.  Click here to view Bespoke’s premium membership options for our best research available.