The Standard & Poor’s 500 Index has returned 24 percent on average in years it’s risen in both January and February, a bullish sign for 2013, according to S&P.
The S&P 500 climbed in both January and February 26 times since 1945, Sam Stovall, S&P’s New York-based chief equity strategist, wrote in a note. All 26 years ended with positive returns when including dividends, the data show. The benchmark gauge for U.S. equities returned 5.2 percent in January and 1.4 percent in February this year including dividends.
Should the S&P 500 follow the historical average, the index would climb to about 1,730 by the end of the year, surpassing the all-time high of 1,565.15 reached in October 2007 and topping all 15 forecasts from Wall Street strategists tracked by Bloomberg. The gauge rose 0.3 percent to 1,519.72 at 12:59 p.m. today, climbing within 3.1 percent of the record, after slipping yesterday when the Senate voted to keep $85 billion of automatic spending cuts in place.
“Even though the investing community faces economic and legislative hurdles in the near and long term, equity prices have risen in both January and February signaling, in our view, that many of these worries are unwarranted,” Stovall wrote in the note dated Feb. 25. “Since 1945, bucking the typical groundhog giveback has been a plus.”
The last two years have seen back-to-back gains in the first two months, leading the S&P 500 to a 16 percent advance in 2012 and a 2.1 percent rise in 2011, including dividends. The biggest advance when the index rose in January and February was the 52 percent rally in 1954.