Fidelity data shows S&P 500 highs often precede strong returns

The S&P 500 index reached a new record high of 7,844.52 intraday on Oct. 6, a milestone that has prompted anxiety among some investors regarding potential market corrections. Fidelity researchers analyzed S&P 500 returns dating back to 1920 and found that investing on days when the index reached an all-time high produced higher average returns than investing on any other day. Over the past 106 years, investments made on all-time high days delivered an average return of 63% in the following five years, compared with an average return of 58.8% for investments made on all other days. The analysis indicates that these performance advantages are more pronounced for investors with longer holding periods. The S&P 500 has delivered average annual returns of 9.98% since 1928, while the index has generated average annual returns of 15.3% over the past 10 years. This recent performance means that $10,000 invested in the Vanguard S&P 500 ETF (VOO) a decade ago would be worth approximately $41,523 today. As of the time of reporting, the S&P 500 remains only slightly below its Oct. 6 record level. The data suggests that new record highs do not necessarily signal an imminent decline, as historical trends show the market often continues to rise after reaching such levels. Fidelity's findings support the view that patient, long-term investors may benefit from maintaining exposure to the index despite short-term volatility or psychological resistance to buying at peak valuations.