Even though the S&P 500 ended February with a nearly 4% monthly loss, there are seasonal reasons to be optimistic as the calendar flips over.
“The good news is that March kicks off two of the strongest months historically for equities, before we hit a period of seasonal weakness from May through October,” said Ryan Detrick, senior market strategist at LPL Financial.
“February finally cracked the volatility genie out of the bottle, and now the big question is: will he stay out for good,” Detrick said. Indeed, besides the volatility that sent shocks throughout financial markets early in February, worries about rising inflation and interest rates led the S&P 500
as well as the Dow Jones Industrial Average
to have their worst monthly performance since January 2016.
But the data shows there could be grounds to be hopeful.
Over the past two decades, March has been the second strongest month for the S&P
on average. Going back further, all the way to 1950, the index still averages 1.2% growth in March, making it the fourth best month. And April has historically been even stronger.
This strength has also been reflected in returns, as March raked in 4.1% on average over the past two decades, outdone only by the average October, according to LPL. Going back to 1950, average March returns were 1.3%.