What Happens After A Big First Quarter For Equities?

Although the S&P 500 Index just missed out on a five-month winning streak in March with a 0.04% loss, the good news is it still gained 5.5% in the first quarter. This came out to the best quarter overall since the fourth quarter of 2015, and it was the best first quarter gain since 2013. Given that the S&P 500 went on to gain another 17.8% in the final three quarters of 2013, the big question is: What does a big first quarter mean?

Going back to 1950*, this was the 25th time the S&P 500 gained 5% or more during the first quarter. The good news for the bulls is the returns after a big first quarter have been broadly stronger across the board.

Here are some stats to consider after the S&P 500 gains 5% or more in the first quarter:

  • April has been up 2.0% on average versus the average April gain of 1.5%.
  • The second quarter has gained 3.2% on average versus a 1.7% average return.
  • The rest of the year, the S&P 500 has been up 9.6% on average versus the average return in the final three quarters of 6.4%.
  • Last, incredibly, the full year has been higher 23 out of 24 times, with only 2011 lower. On a total return basis (including dividends), all 24 years have been higher.

Per Ryan Detrick, Senior Market Strategist, “Although you’d think a big first quarter could lead to some near-term weakness, it sure doesn’t look like that. In fact, continued strength and a good deal of outperformance are perfectly normal after a big first quarter. Of course, all years are different and there are many other factors to consider; however, this does help to suggest that any pullbacks could be used as buying opportunities and that the bull market is still alive and well.”



* Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of the predecessor index, the S&P 90.

Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

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The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

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