This Economic Indicator Just Hit an All-Time Low; History Says This Is What Happens Next for Stocks

While the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq 100 indices are inactive adjacent all-time highs, a fig of indicators suggest things aren't rather truthful affirmative astatine the moment.

I've discussed a fig of times successful the caller past however the labour marketplace is stagnant, and the fig of occupation openings disposable is hitting post-COVID lows. That information unsocial would suggest a troubling outlook, but sentiment surrounding existent conditions is adjacent much dismal.

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The University of Michigan Current Economic Conditions Index conscionable deed a caller all-time low.

The December 2025 speechmaking was 50.4, and the 3-month rolling mean successful January 2026 deed 52.3. Both of those numbers are the lowest ever seen connected this study going each the mode backmost to the precocious 1970s.

Of course, immoderate indicator that suggests things are worse present than they person been astatine immoderate constituent successful the past 50 years isn't a bully thing. But tin it really beryllium work arsenic a contrarian indicator? Sort of a "buy low" benignant signal?

History suggests that the reply is yes! But let's excavation into the information first.

To start, I pulled each monthly Current Economic Conditions Index speechmaking going backmost to 1978. In addition, I pulled each month-end S&P 500 scale values implicit the past 50 years.

My volition is to look astatine forward-12-month scale returns to gauge however the S&P 500 performs with antithetic Current Economic Conditions Index readings arsenic the starting point. The 12-month play for the purposes of my investigation begins with the period pursuing the study merchandise date. For example, if the study was for January 1991, I looked astatine S&P 500 returns from Feb. 1, 1991 to Jan. 31, 1992.

I besides grouped monthly study readings into 5-point "buckets." For example, a monthly speechmaking of 84.4 would autumn into the "80-84.9" group. Here are the results of my study.

Source: Investing.com

While determination is immoderate choppiness contiguous successful each of the idiosyncratic buckets, determination is simply a reasonably wide signifier that emerges.