Investors may want to prepare for more pain on Friday if the past years of this infamous holiday are any indication. Here’s a look at what a Friday the 13th of May meant for the markets.
What happened: The stock market has been down year-to-date and in the midst of a correction that shows no end in sight. To make matters worse, this Friday is the first Friday the 13th, a day that for some coincides with bad luck, since August 2021.
“It’s been one of the worst starts to a year ever and now we have to worry about Friday the 13th,” LPL Financial Chief Market Strategist ryan derick mentioned.
The good news is that the last four occurrences of Friday the 13th have brought positive daily gains for the broader stock market; The bad news is that when Friday the 13th happened in May, it didn’t produce strong returns.
“Now the bad news: May hasn’t been great so far, the last three times. »
Why is this important: May ranks as the third worst month for daily Friday the 13th performance. In 13 occurrences since 1928, the S&P 500 has fallen an average of 0.35% on Friday the 13th of May. This only follows October (-0.49%) and November (-0.50%) for the worst month for the infamous holiday.
March and June rank as the two best months for a Friday the 13th to occur with average returns of 0.56% and 0.55%, respectively.
This could mean that the S&P 500, which is tracked with the SPDR S&P 500 ETF TO SPY, is trading Friday to keep the May tradition alive. the SPDR Dow Jones Industrial Average ETF IAD may also continue to come under pressure as large caps have not been immune to market stumbles.
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And after: Detrick points out that the S&P 500 has been in a correction since Jan. 3 down 18%. The average correction is -14.9%, which makes the current correction worse than average. The current correction lasted 128 days, far longer than the 88-day average since 1980 for market corrections.
“If I feel like this year hasn’t had many green days, it’s probably because that’s very true. In fact, in 2022, only 43.3% (39 out of 90 ) days saw the S&P 500 end higher,” Detrick said.
The good news for investors is that the average one-year return from the bottom of a correction is 23.0% since 1980. The average two-year return from the bottom of a correction since 1980 is 37 .5%.
Only twice out of 24 times has the market been negative for the year following the correction, which could provide some hope for long-term investors.
SPY Price Action: The SPDR S&P 500 ETF is trading around $386.90 against a 52-week range of $391.96-$479.98.
Photo: Screenshot “Anger Management”, courtesy of Columbia Pictures/Sony Pictures Releasing