The S&P 500’s positive start in January 2024, with a 1.6% increase, might be a precursor to a prosperous year in the stock market.
As Tom Logue, CFA, senior equity strategist at Commonwealth Financial Network, highlights in a post, a positive market performance in January has historically led to positive returns for the remainder of the year.
Positive January Bodes Well For The Whole Year
Market data underlines this optimistic outlook: since 1957, when January yields returns over 1.5%, which occurred 33 times excluding 2024, there's an over 80% probability of positive market returns for the remaining 11 months, boasting a median return of 13.51%.
| S&P 500 Up >1.5% in January | 3-Month Returns | 6-Month Returns | 11-Month Returns |
|---|---|---|---|
| Total Occurrences | 33 | 33 | 33 |
| % Positive | 84.85% | 78.79% | 84.85% |
| Average Return | 3.49% | 6.53% | 11.62% |
| Median Return | 4.09% | 5.81% | 13.51% |
| Best Return | 13.41% | 21.39% | 32.40% |
| Worst Return | -8.53% | -11.33% | -15.95% |
It’s worth noting that since 1957, January has posted a positive return (>0%) 39 times, excluding 2024. Among those 39 occurrences, 84.62% saw a positive 11-month return, with a median return of 13.32%.
But February Performance Is Less Optimistic: While January’s positive performance often translates into a strong year, February’s performance is less consistent. A little over 60% of the time, positive January returns were followed by positive February returns. In instances where February was negative, the average monthly return was -3%.
Back-to-Back Strong Januarys: When the S&P 500 has experienced back-to-back strong January returns (more than 1.5%) in consecutive years – as it happened in 2023 and 2024 – then it has been followed by positive 11-month returns in 13 out of 14 instances.
Moreover, nine of those 14 times saw double-digit 11-month returns.
Election Year January Returns: In U.S. presidential election years since 1957, when January had returns exceeding 1.5%, all eight occurrences led to positive returns over the next 11 months.
This analysis suggests an encouraging trend, but as always in the stock market, past performance is no guarantees of future results.
| S&P 500 Up During January Election Years | 1-Month Returns | 3-Month Returns | 6-Month Returns | 11-Month Returns |
|---|---|---|---|---|
| Total Occurrences | 8 | 8 | 8 | 8 |
| % Positive | 75.00% | 75.00% | 87.50% | 100.00% |
| Average Return | 1.41% | 1.09% | 3.56% | 11.05% |
| Median Return | 1.10% | 2.26% | 4.21% | 9.34% |
| Best Return | 4.18% | 6.51% | 7.97% | 17.93% |
| Worst Return | -1.27% | -7.67% | -2.60% | 6.54% |
As of the close on the first trading day in February 2024, the SPDR S&P 500 ETF Trust SPY was up 1.3%.
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