March is here, and investors are wondering if the strong rally in U.S. stocks during February will continue or if it’s time to take profits. History shows that after a significant rally in February, stocks have had mixed performance in March. According to Bespoke Investment Group, some initial weakness in the first few days of March “wouldn’t be surprising.”
Looking back at historical data, the S&P 500 has seen varied results at the start of March after a more than 4% rally in the previous month. In the nine prior occurrences since 1953, the first day of March saw an average return of 0.26% and a median return of 0.23%. The large-cap index closed higher slightly more than half the time. The second day of March has tended to see positive and consistent returns for the S&P 500, with gains in eight out of the nine instances. However, the index has tended to decline thereafter.
The fourth and fifth trading days of March have also seen a modest decline in their month-to-date performance compared to other Marches since 1953. Despite this, the overall figures are inconclusive, but some weakness at the beginning of the month wouldn’t be unexpected, according to Bespoke analysts.
On Friday morning, U.S. stocks kicked off March on a subdued note. The Nasdaq Composite continued to outperform after settling at a record high for the first time since 2021 in the previous session. The S&P 500 was rising 0.6%, while the Nasdaq was up 1% and the Dow Jones Industrial Average was edging up 0.2%.
When looking at long-term trends, March has shown “middling” returns for the S&P 500 since 1928. The gains have been unremarkable compared to other months. However, when the S&P 500 has come off a hot streak in January and February, March has seen very weak results. In the nine instances since 1928, the large-cap index suffered an average monthly decline of 2.87%.
Overall, the performance of U.S. stocks in March remains uncertain. While historical data provides some insights, it is not a definitive indicator of future performance. Investors will need to closely monitor market conditions and make informed decisions based on their individual investment strategies.