February 2023

The S&P 500 Index declined approximately 18% in 2022. This dismal performance may leave investors wondering if 2023 will be more of the same. It’s a reasonable concern. Though we can’t answer it definitively, we can look at how markets have behaved in the past to infer what could happen in the future.

As the chart below illustrates, it’s rare for the S&P 500 to post consecutive negative calendar year returns. The chart also spotlights the market’s resiliency and strength. Over the past 96 years, the S&P 500 posted a positive return approximately 72% of the time.

Source: Bloomberg, S&P Dow Jones Indices, American Enterprise Investment Services, Inc. Data as of 01/23/2023. Past performance is not a guarantee of future results.

When the S&P 500 has posted back-to-back years of declines, those periods were marked by historically significant macroeconomic events that weighed on market sentiment:

• 1929-1932: Great Depression 
• 1939-1941: World War II 
• 2000-2002: Bursting of the tech bubble

Making sense of historical data for today’s environment

We believe today’s elevated inflation pressures or even a shallow U.S. recession could be issues market participants eventually look through as they anticipate improving inflation and growth trends over time. That said, this year's stock performance could be constrained by elevated interest rates compared to recent history and slowing growth.

Bottom line

The 69 years of positive stock returns lead us to believe investors and stock prices will eventually return to better days. If you have questions about the impact of the recent market performance on your financial goals, reach out to your Ameriprise financial advisor.