A bullish streak for the S&P 500 came to a bitter end on Thursday, leaving the stock index halfway to a correction.
The broad-market benchmark notched a 5% decline from a recent peak for the first time in 227 trading days, ending a period of nearly uninterrupted gains. The previous longest streak without a 5% drawdown for the S&P 500 was a 404-session run that started in June 2016, according to Dow Jones Market Data.
Declines for the S&P 500 on Thursday came at September’s end and the close of the third quarter, which likely added to turbulence as investors positioned for the final quarter of 2021.
It has been extremely rare for the stock market to enjoy such a period of relative effervescence. Indeed, such lengthy stretches without a 5% pullback or better have occurred on only eight occasions in the S&P 500 index.
However, the market’s buoyancy has been fizzling over the past several weeks as concerns about surging inflation, worries about a government shutdown and a debt-ceiling breach, as well as concerns about the Federal Reserve pulling back market-accommodative policies that have been in place since the height of the COVID-led panic last year.
On Thursday, the S&P 500 ended 5.1% below its Sept. 2 record close at 4,536.95, after a withering day and month. The index fell 4.8% in September to mark its worst September since 2011, already one of the toughest months for equities. The index did manage to eke out a quarterly gain of 0.2%.
However, the Dow Jones Industrial Average DJIA, -1.59% also notched a 5% drawdown from its Aug. 16 record close at 35,625.40. The Dow registered a 4.3% monthly drop, marking its worst September loss since 2011 and its largest monthly drop since March of 2020. The blue-chip index notched a 1.9% third-quarter loss.
Meanwhile, the Nasdaq Composite Index COMP, -0.44% closed down 5.3% on the month, also representing its worst September in a decade and its steepest monthly drop since March 2020. It booked a quarterly loss of 0.4%.
The Dow and the Nasdaq also snapped a five-quarter win streak.
Thursday’s declines puts all three benchmarks halfway to what market technicians define as a correction, or a drop of at least 10%, but not greater than 20%, from a recent peak.