Markets
Visualizing 150 Years of S&P 500 Returns
This visual is part of our 2024 Global Forecast Series. For full access to the series, learn more here.
Visualizing 150 Years of S&P 500 Returns
2023 was supposed to be a tough year for stocks.
However, consumers shrugged off higher interest rates, and investors were more optimistic than fearful largely due to exuberance around AI. As a result, the S&P 500 rallied over 24% in 2023.
To put these gains in perspective, this graphic shows yearly returns for the S&P 500 since 1874, using data from TradingView.
S&P 500 Historical Returns (1874-2023)
Driving the S&P 500’s returns in 2023 was the force of the “Magnificent Seven”.
These mega caps include Amazon, Apple, Nvidia, Tesla, Microsoft, Meta, and Alphabet. Together, they generated the lion’s share of the index’s returns.
By contrast, a record 72% of stocks underperformed the S&P 500 index. Overall, 2023’s stock market returns were not only rare, but comparatively quite strong, as shown in the table below:
| S&P 500 Annual Return | Number of Years | Share of Years |
|---|---|---|
| +40 to +50% or more | 3 | 2.0% |
| +30 to +40% | 9 | 5.4% |
| +20 to +30% | 21 | 14.1% |
| +10 to +20% | 33 | 22.1% |
| +0 to +10% | 30 | 20.1% |
| +0 to -10% | 25 | 16.8% |
| -10 to -20% | 18 | 12.1% |
| -20 to -30% | 7 | 4.7% |
| -30 to -40% | 3 | 2.0% |
| -40 to -50% or more | 1 | 0.7% |
Like a bell curve, the majority of returns fall near the middle, with the highest number of returns in the 10% to 20% range.
The best year was in 1933, when the market soared almost 54% during the Great Depression.
After at least 1,000 banks failed, the U.S. government set up a temporary insurance policy that would soon become the Federal Deposit Insurance Corporation (FDIC). This restored confidence and drove money back into banks, increasing the money supply and supporting more production and spending.
The market faced its worst year just two years earlier, plummeting 43% amid the collapse of the U.S. banking system. The last time stocks tumbled nearly that far was in 2008.
Forecasting S&P 500 Returns for 2024
Looking back at 2023, we can see that Wall Street’s consensus was far off the mark.
“I’ve never seen the consensus as wrong as it was in 2023.”
-Andrew Pease, Chief Investment Strategist at Russell Investments
While many firms were cautious with their forecasts going into 2023, Goldman Sachs was one of the few to say the economy would avoid a recession.
Among the main reasons behind this forecast was that real disposable personal income was rebounding and U.S. GDP looked resilient in late 2022. These factors, among others, were seen to be more powerful drivers than tighter financial conditions.
This year, Goldman Sachs estimates that the S&P 500 will see more moderate returns, rising 7%. Overall, analysts forecast that the index will return 5-10%, presenting another cautiously optimistic outlook for 2024.
Markets
The European Stock Market: Attractive Valuations Offer Opportunities
On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?
European Stock Market: Attractive Valuations Offer Opportunities
Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.
The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.
Attractive Valuations
Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.
| Index | Price-to-Earnings Ratio | Price-to-Book Ratio |
|---|---|---|
| EURO STOXX 50 | 14.9 | 2.2 |
| STOXX Europe 600 | 14.4 | 2 |
| U.S. | 25.9 | 4.7 |
| Canada | 16.1 | 1.8 |
| Japan | 15.4 | 1.6 |
| Asia Pacific ex. China | 17.1 | 1.8 |
Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.
On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.
Research also shows that lower price ratios have historically led to higher long-term returns.
Market Movements Not Closely Connected
Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.
The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.
| EURO STOXX 50 | STOXX EUROPE 600 | U.S. | Canada | Japan | Asia Pacific ex. China |
|
|---|---|---|---|---|---|---|
| EURO STOXX 50 | 1.00 | 0.97 | 0.55 | 0.67 | 0.24 | 0.43 |
| STOXX EUROPE 600 | 1.00 | 0.56 | 0.71 | 0.28 | 0.48 | |
| U.S. | 1.00 | 0.73 | 0.12 | 0.25 | ||
| Canada | 1.00 | 0.22 | 0.40 | |||
| Japan | 1.00 | 0.88 | ||||
| Asia Pacific ex. China | 1.00 |
Data is based on daily USD returns.
European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.
Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors.
Tracking the Market
For investors interested in European equities, STOXX offers a variety of flagship indices:
| Index | Description | Market Cap |
|---|---|---|
| STOXX Europe 600 | Pan-regional, broad market | €10.5T |
| STOXX Developed Europe | Pan-regional, broad-market | €9.9T |
| STOXX Europe 600 ESG-X | Pan-regional, broad market, sustainability focus | €9.7T |
| STOXX Europe 50 | Pan-regional, blue-chip | €5.1T |
| EURO STOXX 50 | Eurozone, blue-chip | €3.5T |
Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.
The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.
“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”
— Axel Lomholt, General Manager at STOXX
Partnering with STOXX to Track the European Stock Market
Are you interested in European equities? STOXX can be a valuable partner:
- Comprehensive, liquid and investable ecosystem
- European heritage, global reach
- Highly sophisticated customization capabilities
- Open architecture approach to using data
- Close partnerships with clients
- Part of ISS STOXX and Deutsche Börse Group
With a full suite of indices, STOXX can help you benchmark against the European stock market.
Learn how STOXX’s European indices offer liquid and effective market access.
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