According to an analysis conducted by Bespoke Investment Group, the S&P 500 index may experience further gains throughout the year based on historical trends. The analysis reveals that when the S&P 500 is trading positively in January, it tends to continue climbing during the remaining four trading days of the month.
Moreover, if the index finishes January in a positive position, the likelihood of its continued advancement for the rest of the year significantly improves. Notably, since the introduction of the five-day trading week in 1953, whenever the S&P 500 has achieved a gain of 2% or more in January, its median performance for the rest of the year has been an impressive 13.5%. Furthermore, the index has recorded positive returns for the remainder of the year in 84% of these instances. The analysis from Bespoke Investment Group highlights that between 1953 and 2023, there have been 31 instances where the S&P 500 has experienced a gain of 2% or more in January.
At the start of a new year, investors often closely examine the initial weeks as an indication of market performance throughout the following months. Consequently, this analysis sheds light on potential market trends for 2024.
Read: Stocks lost money over the first 5 trading days of January. What does this mean for 2024?
However, it is crucial to note that the prospects for the index throughout the year are typically less positive if it finishes January with weaker gains or in a negative position. If the S&P 500 achieves a gain of less than 2% in January, its median performance for the rest of the year drops to 6.4%, with positive returns materializing only 68% of the time.
According to FactSet data, the S&P 500 has shown a gain of 2.5% since the beginning of January. Currently, the index is on track to finish lower for the day, with a 0.1% decrease and reaching 4,887 points as trading for the week nears its end.
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