Why a poor start to the year for S&P 500 doesn’t bode well for stocks in 2024.

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The S&P 500’s movement over the first five days of the trading year often provides a good indicator of how it will perform over the rest of the year, according to historical data. But if so, that doesn’t bode well for stocks in 2024. 

Historically, the large-cap U.S. equity benchmark
SPX
has seen its performance in the first five trading days and over the full year correlate in the same direction 69% of the time, based on Dow Jones Market Data going back to 1950. In election years, that correlation took place 83% of the time. The trend has also held true in eight of the last 12 years, and in 14 of the last 16 presidential election years.

This year, the S&P 500 is on pace to log a 1.8% decline over its first four trading days, according to FactSet data. The last time the index fell 1% or more in its first five trading days of the year, in 2022, it lost 19.44% for the full year.

When the S&P 500 logged gains over the first five trading days of the year, it saw an average return of 14.2% throughout the whole year, per the market data dating back to 1950. When it was down over the first five days, it recorded an average return of 0.3% for the full year.

U.S. stocks traded mostly lower on Friday, with the Dow Jones Industrial Average
DJIA
down 0.1%. The S&P 500 was down less than 0.1% and the Nasdaq Composite
COMP
was losing 0.2%.

— Ken Jimenez and Michael DeStefano contributed.



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