First-quarter returns suggest the market may have more to give.
Stocks went out like a lion in March, with the S&P 500 hitting its 22nd record high so far this year and delivering a 10.2% return for the quarter. Can investors expect more of the same? Historically, there have been 11 years since 1950 in which the S&P 500 has gained more than 10% during the first quarter (not counting 2024).
- In 10 of those 11 instances—90.9%—stocks finished the year even higher (see the chart).
- Stocks gained 21.4% on average during those 10 calendar years (see the chart), versus just 7.2% on average for all other years since 1950.
Annual Returns for the S&P 500 When Q1 is Greater Than 10%
Source: Bloomberg, calculations by Horizon Investments, as of 04/01/2024. It is not possible to invest directly in an index.
The one time stocks didn’t build on their 10%+ first-quarter gain was 1987, which saw the infamous Black Monday market crash. Even so, stocks still ended the year in positive territory (up 2%).
Of course, there’s no guarantee the past’s winning ways will repeat in 2024. But there’s a lot to be said about what first-quarter momentum could mean for stock returns going forward—something we pointed out at the start of this year.
Capturing those potential returns requires getting off the sidelines and into the game—something investors holding excess cash may want to consider as we start a new quarter.
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