After losing 0.1% on Monday, the S&P 500 gained less than 0.1% on Tuesday. This is keeping with the benchmark’s movement recently, where it has traded within a range of 1% over an extended period. As the index remains stuck within the doldrums, market watchers are struggling to predict how long such a trend will continue.
That may be difficult to predict, but it could possibly extend over quite a few of the next sessions. Even as a better than expected earnings season has been pushing up the index, a number of factors, primarily the uncertain stance of the new administration have been acting as a drag on stocks. However, some components of the S&P 500 still hold the promise for superior gains and would make lucrative additions to your portfolio even at this time.
Trading Within a Tight Band
As of the beginning of trading on Feb 6, the S&P 500 had not experienced a daily trading range of 1% or more over 34 successive sessions. This was the longest such stretch in 22 years, according to the Wall Street Journal. This, in fact, has happened, and the market has continued to linger around similar levels on Monday and Tuesday as well.
According to Thomson Reuters data, this is the longest such streak since 1974. Since Dec 14, the average daily trading range within an intraday high and low has been merely 0.54%, per FactSet data. Last year, the average daily trading range stood at 0.96%.
Of course, the S&P 500 has gained 1% over this stretch and has also created new all-time highs, as recently as Jan 25. However, uncertainties regarding the Trump administration’s policies, the reluctance of the Fed Reserve to raise rates and steep valuations have curbed any significant movement for stocks.