In my last blog, I talked about how strong Januarys historically tend to lead to strong returns throughout the remainder of the year. But I also noted there could be a bit of volatility in February. To my surprise, this turned out to be one of the better Februarys the S&P 500 has ever had, finishing the month up 5.17 percent.
While I may seem like a broken record with my consistently optimistic historical analyses, please know my perspectives are data-driven. Should the data suggest a shift toward a less favorable outlook? My viewpoints will evolve accordingly.
2024 Coming in Hot
With a strong February now behind us, the S&P 500 is up 6.84 percent through the first two months of 2024. This marks the 20th time since 1957 when the S&P 500 was up more than 5 percent through the first two months of the year. Of those prior 19 occurrences, 17 generated positive returns over the final 10 months of the year and 12 saw double-digit returns to finish off the year.
Strong February Returns
Since 1957, including February 2024, we now have 68 Februarys under the belt. Including this month, only 36 (52.94 percent) of those have had a positive return. Of those 35 other years that saw February post a positive return, more than 80 percent saw a positive return over the next 10 months into year-end.
Even more impressive, since 1957, this was only the seventh year where the S&P 500 posted a return greater than 5 percent during February and only the fifth year where the S&P 500 is up more than 5 percent through the first two months of the year and posted a February return greater than 5 percent. The average 12-month return of those other four years? 19.47 percent.
Historic Run Since October
The S&P 500 might be off to a hot start in 2024, but the run it has had over the past four months is a historic one. With February coming to an end, the S&P 500 is up 21.5 percent since its October 2023 close price. Since 1957, the index has returned more than 20 percent over a four-month timeframe only 14 other times, with the last coming in the summer of 2020. Twelve of those other 14 occurrences saw a double-digit return over the next 12 months, with the worst return being a positive 1.16 percent return.
Long-Term Matters
I usually mention how, in the short term, volatility could exist. But the more I think about it, does it matter? The long-term conclusions from all the data and research I have done point to higher prices. When it comes to the markets, that is what matters. Of course (and as always), historical price returns are far from a guarantee of future price returns.
All indices are unmanaged, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.
Disclosure
The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.
Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.
The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.
The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.
One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.
The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.
The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.
Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.
Member FINRA, SIPC
Please review our Terms of Use.
Commonwealth Financial Network®
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out our podcasts.
© Commonwealth Financial Network
Read more commentaries by Commonwealth Financial Network
