January Barometer Over the Long Run

Does long term data support the belief that “as goes January, so goes the rest of the year” (January is the barometer) for the the U.S. stock market? To investigate, we consider two views of the S&P 500 Index over its full history:

• Correlations between index returns during each calendar month and returns over the next 11 months.
• Index performance during the next 11 months across ranked thirds (terciles) of January returns.

Using monthly closes of the S&P 500 Index from the end of 1927 through 2023 (96 years), we find that: (more…)