Closer Look at February

Weekly Market Update
Steven A. Lone

A late month selloff in January saw the S&P 500 Index close marginally lower for the month. But stocks have taken off in February, with the S&P 500 up nearly 4% this month, as US economic data remains strong and fears over the worst-case scenarios for the coronavirus appear overblown.

Historically, February has been a month when stocks tend to take a bit of a break. As shown in the LPL Chart of the Day, the S&P 500 has been flat, on average, during the second month of an election year. What is most interesting, though, is how weak October has been historically leading up to presidential elections, yet how strong stocks have been in November and December as political uncertainty clears following elections.

S&P 500 Index average monthly returns during an election year

Maybe the big gains so far this month shouldn’t be a total surprise? “Yes, February historically has been a troublesome month for stocks,” said LPL Financial Senior Market Strategist Ryan Detrick. “Yet over the past decade, no month has seen better returns.” In fact, the S&P 500 has gained 2.34% on average in February over the past decade, compared with the second best month of October’s gain of 2.29%.

February is usually weak, but has been the best month the past 10 years

For more of our investment insights and thoughts on the economy and the coronavirus, check out our latest Market Signals podcast.


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