The S&P 500 Index is now up just over 19% year to date, which is somewhat remarkable given where we were just one year ago. At that point, year to date, the Index was down about 17%, and things were rather gloomy.
What a difference a year makes. However, I remain surprised by how we got here, in terms of market volatility, or lack thereof. (My rather pedestrian definition of "volatility" is when the S&P closes up or down at least 1%.)
Since my last column on this subject, we've experienced another 26 trading days, with just three volatile days, all to the plus side. During that stretch, the S&P is up just under 4%, not a bad run for five weeks.
Year to date, that gets us to 40 "volatile days" out of 139 trading days, good for a 29% hit rate. Remarkably, we've still experienced just two days that the Index closed up or down 2% (one positive, one negative.) Through the same period in 2022, there were already 68 volatile days (32 positive, 36 negative), with 27 moves 2% or more.
The S&P has somewhat calmly climbed back to levels last seen in April 2022, in a growth-led rally. Case in point, the Russell 1000 Index is up 19.25% year to date, but the spread between Russell 1000 Growth (up 31.01%) and Russell 1000 Value (up 8.2%) is wide enough to drive a truck through.
That leads to valuations, and the S&P 500, at just over 26x earnings certainly is not cheap (IMHO). If you follow the Shiller P/E ratio, which is based on average inflation-adjusted earnings from the previous 10 years, it's just a shade below 32x earnings.
In addition, the S&P trades at 4.43x book value, at the beginning of 2020, prior to the pandemic, it was at about 3.5x.
The bottom line is that the market is not cheap, and it has not been all that volatile. I believe the rest of the year may be a bit more interesting in terms of volatility.
It's also possible that the performance discrepancy between growth and value will begin to narrow.