What Does A Big First Quarter Mean?

With a day to go, this is one of the best first quarters for the S&P 500 Index ever. Of course, it comes on the heels of the worst fourth quarter since the financial crisis and the worst December since the Great Depression. Still, you have to be impressed with the overall bounce back after the big drop late last year.

“A big start to the year historically has suggested the bulls could remain in charge the rest of the year,” explained LPL Senior Market Strategist Ryan Detrick. “In fact, 9 of the past 10 times the S&P 500 was up at least 10% during the first quarter, the rest of the year was also in the green.”

As our LPL Chart of the Day shows, continued gains the final three quarters of the year were quite normal after a big first quarter. It is worth noting, however, that extreme gains might not be in the cards, as the average return for the final three quarters of the year is 5.8%, which is actually lower than the average year’s final three quarters of 6.3%.

A Good Start tot he Year Can Have Bulls Smiling

For more on our thoughts on the current state of stocks, be sure to read why we readjusted our recommended domestic equity allocation in Balanced Risk Reward.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

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

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured.  These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency.  The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

Member FINRA/SIPC

For Public Use | Tracking # 1-837512 (Exp. 03/20)