Common Uncommons

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.

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.

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.

It's not uncommon to have these moments of stress in a big year, as can be seen from the chart below.

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.