The Paris 2024 Summer Olympics kicked off over the weekend, and markets we're in a celebratory mood. The S&P 500 clawed back some of its losses on Friday, but still finished the week around 1.5% down. The Nasdaq finished 3.2% down. Meanwhile, the small-cap Russell 2000 finished the week over 3.1 % up, underlining the current rotation away from tech.
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It's been a little while since we've seen any kind of real downturn. In fact, we've had 356 trading sessions without a 2% drop in the stock market – the longest streak since 2007.
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Despite Friday's gain, the current unpleasantness in markets may continue. In the second half of a bull market year (like the one we are in right now), the average deepest setback is around 9% — about twice what we've seen so far.
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It's not uncommon to have these moments of stress in a big year, as can be seen from the chart below.
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We'll find out more throughout earnings seasons as we get more data points from companies. Diversification in your portfolio doesn't pay off until it does. Keep that seatbelt on folks – turbulence ahead.
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