Political Calculations
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25 February 2025
Empty way of tall trees photo by Jen Timms on Unsplash - https://unsplash.com/photos/empty-way-of-tall-trees-VivzPEYabew. Dickens quote added with Quofast Quotes Maker - https://quofast.com/quotes-maker/

What was the best year ever for the S&P 500 (Index: SPX)? What was the worst year ever for the index?

These are questions that are usually answered with tables of data. And that's fine if all you want to know is how much the value of the S&P 500 changed over the course of a year. But what if you also want to know when during the year that the best or worst year became the index' best or worst year?

Data tables won't cut in in that situation. In this case, what you really want is a chart that visually presents the best ever and worst ever extremes for these stocks, then shows the trajectory the index took throughout the year to reach its end.

We've built that chart, here it is using available daily trading data for the S&P 500 from 1950 through 2024:

S&P 500 Index Value as a Percentage of First Day of Year's Closing Value, 1950-2024

The best year ever for the S&P 500 is 1954. That was a year in which the index was always above its mean and median trajectories. But it wasn't until some 211 trading days into the 253 trading-day long year that it set the mark as the best year ever for the S&P 500. The S&P 500 ended 1954 at a level (35.98) that was 144.2% above where it closed on the year's first day of trading (24.95).

The worst year ever for the stocks that collective make up the composite-weighted index is 2008. Stock prices stayed below the mean and median trajectories throughout the year, but also never rose above the level they were on the first trading day of 2008. Even though the year was a bad one for the S&P 500, it didn't become the index' worst year ever until 196 trading days into the year. It then stayed the worst year ever for another 57 trading days past that. The index started the year at closing out 2008 at a level (903.25) just 62.4% of the level it was at the end of the year's first day of trading (1,447.16).

For good measure, we also charted the S&P 500's trajectory during 2020, when the coronavirus pandemic struck the U.S. The index started 2020 mostly bouncing around the median and mean trajectory for stocks and had just risen above those levels when stocks started to crash about 35 trading days into the year. That crash continued and by the 49th trading day of the year, 2020 became the worst year ever for the S&P 500 at that point in time.

But 2020 only sets that bar through the 78th trading day of the year. The S&P 500 went on to recover and ultimately ended the year at a value (3,756.10) some 114.6% of the value at which it closed on the first trading day of the year (3,257.85). That's better than either the historical average or median trajectories for the index.

References

Yahoo! Finance. S&P 500 Stock Historical Prices and Data. [Online database]. Accessed 22 February 2025.

Image credit: Photo by Jen Timms on Unsplash. Quote added with Quofast Quotes Maker.

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24 February 2025
An editorial cartoon of a Wall Street bear who's worried about the future of the stock market. Image generated by Microsoft Copilot Designer

The S&P 500 (Index: SPX) had a pretty active week despite the trading week being shortened by the Presidents Day holiday. The index reached an all-time new record high of 6,144.15 on Wednesday, 23 February 2025 before retreating to close out the week at 6,013.13, about 1.7% below where it ended the week before.

Driving the market to its new record high was a continuation of the momentum in investor expectations toward more rather than fewer Federal Reserve rate cuts in 2025.

That shift could be seen in the CME Group's FedWatch Tool, which is once again forecasting two rate cuts in 2025. It projects a quarter point rate cut when Fed meets on 18 June (2025-Q2), six weeks later than it predicted a week ago. Meanwhile, the FedWatch tool is also forecasting another quarter point rate cut when the Fed meets on 10 December (2025-Q4).

But late in the week, something prompted investors to suddenly shift their forward-looking attention inward to the nearer term future of 2025-Q2. The latest update of the alternative futures chart shows that sudden shift, with the trajectory of the index moving to the bottom of the typical range for where we would expect to find it when investors focus their attention on 2025-Q2.

Alternative Futures - S&P 500 - 2025Q1 - Standard Model (m=+1.5 from 9 March 2023) - Snapshot on 21 Feb 2025

Since the change was less than two percent, we don't have high confidence in a prominent explanation for the sudden drop, which traces back to a report pointing to the possible emergence of a new infectious coronavirus in China. There are competing explanations for the sudden pullback in the S&P 500, which you can evaluate for yourself in the market-moving headlines of the week that was:

Tuesday, 18 February 2025
Wednesday, 19 February 2025
Thursday, 20 February 2025
Friday, 21 February 2025

The Atlanta Fed's GDPNow tool's projection of what real GDP growth will be in the 2025-Q1 held steady at +2.3% for a second week.

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bear who's worried about the future of the stock market."

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21 February 2025

Carpenters working to frame houses with high ceilings have a unique challenge. Setting studs to be both vertical and the right length becomes hard because the standard tape measures they use for nearly all their measurements are designed to work best when used to take measurements in a horizontal orientation. But when they're used to make vertical measurements over a span that's longer than the carpenter can reach, things go awry.

Here, if they can get the tape to stay straight, the measurement they need to read is often well above them and hard to read. But over a long enough span, the tape will start to flop under its own weight. That makes it hard to keep straight, stay in the right orientation, and cover the distance they need to get an accurate measurement. It almost ensures they have to go through a lot of trial and error to successfully cut a vertical stud to the right length for every board they need to cut. They can cut the boards long, but will often have to do extra work with multiple iterations to trim it down to the right size. And if they cut it short, they will have wasted material because once it's cut short, it cannot be used how they intended.

A Kickstarter project that will run to 10 March 2025 aims to address that challenge with some true outside the box thinking. In the following 3-minute video, Ray, a framing carpenter, describes how he developed the prototype along with a design team from Ox Tools for the Speedframe, an extendable measuring level that solves the problems of taking long vertical measurements for professional carpenters, masons, and glaziers.

In modern construction, lasers are often used to take measurements over distances that are too long for traditional measuring tapes to be used successfully, but have the problem of being slow. Professionals using the Speedframe can often take the measurements they need up to eight times faster than laser measuring tools, which is a huge advantage.

The good news is this Kickstarter project is already fully funded. The Speedframe extended measuring level will make it to the marketplace, which they're aiming to do in July 2025.

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20 February 2025
A crystal ball with the word 'SP 500' written inside it (and 'Dividends' above it) - Image generated by Microsoft Copilot Designer.

Several weeks have passed since our previous look at the expected future quarterly dividends of the S&P 500 (Index: SPX) in 2025.

Our last snapshot was taken on 21 January 2025, our new picture of the outlook for the index' dividends in 2025 was snapped on 14 February 2025. In between, investor expectations for how many dividends per share will be paid out before the end of the current quarter of 2025-Q1 rose from $19.95 to $20.15, which is quite a bump. The outlook also improved for the upcoming second quarter of 2025, although to a lesser extent as the forecast rose from $19.04 per share to $19.15 per share.

Looking further out, the future prospects for the S&P 500's quarterly dividend payouts were either slightly negative or slightly positive. Projected dividends in 2025-Q3 dipped from $19.41 per share to $19.38, while 2025-Q4's dividends rose from $19.44 per share to $19.46.

The following animated chart shows these changes for current and future quarterly dividends along with the final recorded reading of the dividend futures for each previous quarter from 2022-Q4 through 2024-Q4. If you're reading this article on a site that republishes our RSS news feed, you may need to click through to our site to see the animation.

Animation: Monthly Snapshots of the Future of S&P 500 Quarterly Dividends per Share for Each Quarter of 2025, 21 January 2025 and 14 February 2025

How changes in the outlook for dividends at specific points of time in the future affects stock prices is described by this math.

More About Dividend Futures Data

For this series, we have been taking a snapshot of the CME Group's S&P 500 quarterly dividend futures data shortly after the second or third week of each month.

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarter's dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the now "current" quarter of 2025-Q1 began on Saturday, 21 December 2024 and will end on Friday, 21 March 2025.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor. S&P reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Dividends' written above it, which we added.

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19 February 2025
A crystal ball with the word 'SP 500' written inside it (and 'Earnings' above it) - Image generated by Microsoft Copilot Designer.

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

The latest snapshot is a little early, but still 90 days since the Fall 2024 snapshot. During this time, remarkably little changed in the outlook for the collective earnings of the companies that make up the S&P 500 index. That relative lack of change is a new development that's taken place over the past six months.

That's remarkable because it runs counter to the pattern we typically see in how the outlook for earnings changes with time. That pattern is one in which the expectations for future earnings tend to erode with each later snapshot.

To be sure, that pattern holds in the Winter 2025 snapshot but the amount of erosion is tiny. Looking at the S&P 500's anticipated earnings per share for the end of the fourth quarter of 2025, we find those expectations dipped by $1.49 per share. That's a decline of just 0.6%.

The following chart, covering how earnings expectations have changed from the end of 2021 through 11 February 2025 illustrates both the typical pattern and the relative lack of change in those expectations since 13 August 2024:

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, December 2021-December 2026, Snapshot on 11 February 2025

The current projection for the S&P 500's earnings per share through the end of 2025 is $249.13, which would represent 18.2% year-over-year earnings growth over December 2024's level of $210.81. Given the typical pattern for how earnings projections develop over time, that figure represents the likely ceiling for potential earnings growth during 2025.

The Winter 2025 snapshot also includes the first projection of the index' expected earnings per share through the end of 2026. The first estimate of what those earnings will be is $289.64 per share.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 13 November 2024. Accessed 17 February 2025.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Earnings' written above it, which we added.

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About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations

Thanks in advance!

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