Daily Stock Market Articles

March Not as Strong in Post-Election Years

As part of the Best Six/Eight Months, March has historically been a respectable performing month with DJIA, S&P 500, NASDAQ, Russell 1000 & 2000, advancing more than 64% of the time with average gains ranging from 0.7% by Russell 2000 to 1.1% by S&P 500.

Post-election year payments to the Piper have exacted a toll on March as average gains are trimmed. (see Vital Statistics table below). In post-election years March ranks: #7 for DJIA and S&P 500; # 8 for Russell 1000 and Russell 2000; and #9 for NASDAQ. NASDAQ also has the largest change in its average performance, dropping from +0.8% in all Marchs since 1971 to a loss of 0.1% in 13 post-elections years. NASDAQ’s massive 14.5% drop in 2001 is only partially offset by its impressive 10.9% advance in 2009.

 

Beware The Ides of March

Rather turbulent in recent years with wild fluctuations and large gains and losses, March has been taking some mean end-of-quarter hits. In post-election years since 1950, March has tended to open strongly, and strength has generally persisted until shortly after mid-month (dashed arrow below). At which point, the major indexes lost momentum and closed out March with some choppy trading. Whereas over the recent 21 years March has trended lower through mid-month then rallied in the second half.

March packs a rather busy docket. It is the end of the first quarter, which brings with it quarterly Quadruple Witching and an abundance of portfolio maneuvers from The Street. March Quad-Witching Weeks have been quite bullish in recent years. But the week after has been nearly the exact opposite, DJIA down 22 of the last 37 years—and often down sharply.

 

That Escalated Quickly


“Boy, that escalated quickly.” Ron Burgundy of Anchorman



This isn’t a surprise
They say the stock market takes the escalator up, but the elevator down and the past four days have sure felt like an elevator down. It feels like a long time ago, but exactly one week ago the S&P 500 was at a new all-time high. Now fear and worry are back. Here’s the thing, the second half of February tends to be one of the weakest parts of the year, not to mention February in a post-election year is the worst month on average. We’ve been discussing all month why late February can be a banana peel and I even said this on CNBC with Scott Wapner last week, before the weakness started.

Here are two charts that should look quite familiar if you’ve been following what we’ve been saying all month.




Back at New Highs, Now What?
Here’s the good news. This is still a bull market and this seasonal weakness doesn’t have us overly concerned yet. A week ago many wondered how stocks could be back at new highs with all of the negative headlines and the easiest answer is we are in a bull market and stocks tend to go higher in bull markets. We’ve been saying we are in a bull market for more than two years and it is important to remember that surprises happen to the upside in bull markets. Here are some reasons stocks are back at new highs, many of which we’ve covered in detail over the last few months:

• Record earnings, solid revenue, and new cycle highs in profit margins
• Markets climb a wall of worry and there is a lot of worry out there
• This bull market is actually quite young, so many more years of gains is possible
• The labor market remains strong, with healthy wages and incomes
• Inflation should improve later this year, potentially opening the door for the Federal Reserve (Fed) to cut more than is being priced in right now
• Productivity in the US has been strong the past six quarters, and historically, periods of strong productivity have led to above-trend economic growth and stock gains
• The bull market is broadening out, meaning many more sectors and groups are leading. It isn’t just about seven big tech stocks anymore

There are likely many more reasons, but one we want to make sure we highlight again is that this bull market is still young. As we show here, it is now only 28 months old and bull markets tend to last many more years once they get to this point. In fact, going back fifty years the five bull markets that made it into their third year (like this one) lasted an average of eight years total and the shortest was five years.



Many investors are scared of heights, meaning they don’t want to touch stocks at new highs. Well, we do like buying low too. We were suggesting overweighting equities in these very commentaries two years ago and fortunately the investors who followed that advice are quite happy to have stocks making new highs. But what do you do now?

It is important to understand that new highs are very common and tend to happen more than you’d think. Starting in 1957 (when the S&P 500 moved to 500 stocks) a new high has been hit about every three weeks, with more than 1,200 new highs along the way. Looking at what happens after all of those new highs, stocks were higher a year later 71.0% of the time and up a median of 8.3%, so about what you tend to see in any random year. Yes, some day there will be a new high that is the last one for a while and rough times could be right around the corner. The good news is we don’t see that happening anytime soon and 2025 still looks like it should be a nice year for investors.



Remembering Five Years Ago
The headlines might be scary today, but they were nothing like what we started experiencing this time five years ago. The S&P 500 peaked on February 19, 2020 and five weeks later was down 34% for the fastest and most vicious bear market ever. Then, nearly just as quickly stocks turned around and rallied, but unfortunately many investors panicked and sold in the depths of the pandemic and took a long time getting back into markets.

They say the stock market is the only place where things go on sale and everyone runs out of the store screaming. Well, we saw a lot of selling and screaming back then and unfortunately a lot of investors sold right before a huge rally and missed a generational buying opportunity.

Think about all of this a little more. We had a 100-year pandemic that shut down the global economy and then a second vicious 25% bear market in 2022. We’ve never seen back-to-back bear markets that close to each other, making the start of this decade extremely rough for investors.



Yet, the S&P 500 is up more than 80% since right before the market peaked in February 2020, for an annualized gain of more than 12%! So if you simply held in the face of two scary bear markets you’d be up more than 80%. That is easier said than done, but many investors did just this.

Now imagine if you not only held, but used that weakness to buy solid companies at very attractive prices? This is why we invest for the long run and use the scary times as an opportunity, not a time to panic.

President Eisenhower once said, “Plans are useless, but planning is everything.” Have a plan for the next time things are bad out there. Are you going to panic? Or use it as a time to follow your plan? Think about that the next time you see some red on the screen and all the commentators on TV all worked up over the latest worry. Worries happen each year—2025 wasn’t going to be any different. Spoiler alert, 2026 and 2027 will have scary headlines and big market down days as well.

This is a bull market and no one knows when it’ll end, but we were one of the very few places to say it was a new bull market two years ago and we still see reasons for it to continue, so enjoy the ride.

 

Claims in the Capital
Thu, Feb 27, 2025

It was a big day for scheduled Thursday releases. For starters, weekly sentiment data showed a huge spike in bearish sentiment (which we covered in today's Chart of the Day and Morning Lineup), and among the economic data releases, jobless claims experienced a notable spike. For seasonally adjusted initial claims through the week of 2/22, claims totaled 242K, up 22K from the previous week's upward revision of 220K. As shown below, at those levels, claims have returned to the upper end of the past few years' range with this marking the largest single-week increase since a 35K surge in October.



Before seasonal adjustment, claims totaled 220.5K. That is up versus the comparable week of the past two years and is more in line with levels from February 2022, meaning that claims are up relative to recent years but not extraordinarily high. On the bright side, claims are moving in line with seasonally normal patterns, as shown in the second chart below. Claims will likely continue to have these seasonal tailwinds out through the spring.



Nationally, claims are higher, but it is hard to classify it as too much of a concern- yet. Additionally, state-level data offers some insight into the uptick. Among many changes, thanks to the new administration taking office, the federal government has been getting a shake-up from audits from the Department of Government Efficiency (DOGE). There have already been job losses as a result of these attempts to curtail government spending, which is showing up through DC area claims. We first noted the increase in claims in the Washington DC metro area in last Thursday's Closer, and the updated data one week later has reaffirmed more jobs have been lost. As shown below, claims from the capital have risen above 2,000 for the first time since Q1 2023, which was around the time of a looming debt ceiling standoff. Before that, the only other spikes of similar size or larger were the COVID period and the 2018-2019 government shutdown.



Of course, looking at claims in the DC area is only one proxy for the loss in government jobs. The Department of Labor also offers a look at claims filed in federal programs. These, of course, are a more direct look at government job loss. As shown in the first chart below, federal employee claims have generally trended lower over the past 15 or so years, having been near record lows (at the time of seasonal annual lows) in the past several years. This time of year usually sees an unwinding of a seasonal spike in claims, but this year, the opposite has been playing out, with claims continuing to move higher in the past couple of weeks.

In fact, the four-week moving average for federal employee claims has risen over 40% on a year-over-year basis. As shown in the second chart below, that spike hardly registers when put up against things like government shutdowns and recessions. One comparable spike worth mentioning, though, is from early 2021, shortly after Biden took office. That was another period with a notable spike in federal claims thanks to hiring freezes and employment reductions due to policy shifts moving from one administration to another. In other words, the recent DOGE job cuts have some very recent parallels.



Obviously, it's still early in the game. It's only been a little more than a month since President Trump's inauguration, so it wouldn't be surprising to see government-related claims continue rising as DOGE continues its auditing. With that in mind, federal employee continuing claims are right about where they were for this time last year. Additionally, like initial claims, those levels are at a seasonal inflection point and are considerably lower than what they have been in past decades.

 

Get Invested: Don't Sleep on Dividends
Fri, Feb 28, 2025

Our "Get Invested" series is a simple yet powerful resource designed to help anyone understand why investing in stocks for the long term is one of the best financial decisions they can make. The slide below from our Get Invested piece is titled "Don't Sleep on Dividends."

Owning the “market” through a “buy and hold” strategy of an ETF like SPY (that tracks the S&P 500) means you’ll capture the dividend yield of the market as well. Over time, those dividends really add up. Since 1993 when the first S&P 500 ETF (SPY) began trading, nearly half of the index’s 2,390% total return has come from capturing and reinvesting quarterly dividend payouts.

 

When the Weekend Was a Good Thing
Fri, Feb 28, 2025

Through yesterday's close, the S&P 500's average daily performance during the second Trump administration has been a decline of 0.8%. The magnitude of the declines hasn't been spread out evenly across each of those days. The chart below shows the S&P 500's daily performance on every trading day since the inauguration, and we have also highlighted Mondays and Fridays in red. The days surrounding the weekend have been notably weak. Of the nine Friday and Monday sessions since 1/21, the S&P 500 has traded lower eight times for a median decline of 0.5%. These are some pretty weak numbers, but in the early days of this administration, we have seen no shortage of Friday afternoon and weekend headlines that the market has been forced to adjust to.



It's still extremely early in this administration, so the extreme weakness of the market on Fridays and Mondays could easily shift, but we found it interesting how much these numbers differ from average weekday performance under President Biden. During his four years in office, Friday and Monday were easily the best days of the trading week, with average gains of 9.8 bps and 8.5 bps, respectively. Just like in life, for the markets, no news is sometimes good news, and unlike the first few weeks of the second Trump Administration, weekends during the Biden Administration tended ot be quiet from Friday afternoons through early Monday.

 

S&P 500 Best on First Trading Day of March Last 25 Years

First trading days of months have a bullish reputation and March is not an exception. Reviewing the last 25 years of data shows S&P 500 has the best record, advancing 68.0% of the time with an average gain of 0.36%. NASDAQ is second best with an impressive 0.65% average gain. Both NASDAQ and DJIA were up 64.0% of the time during the period. DJIA has been modestly softer with an average advance of 0.27%.

March’s first trading day strength has not been limited to just the last 25 years. Since 1950, DJIA has advanced 51 times in 75 years (68.0%) with an average gain of 0.23%. S&P 500 was nearly as consistent, up 64.0% of the time with an average gain of 0.25%. NASDAQ has also been a solid performer since 1971, up 34 times in 54 years (63.0%) with a respectable 0.37% average.

 

Get Invested: Ignore the Noise
Sat, Mar 1, 2025

Our "Get Invested" series is a simple yet powerful resource designed to help anyone understand why investing in stocks for the long term is one of the best financial decisions they can make. The slide below from our Get Invested piece is titled "Ignore the Noise."

It’s hard to avoid monitoring the day-to-day action of the market when your hard-earned money is at stake, but for money that’s invested for the long-term, it’s best to try and ignore the noise.

The left chart below shows daily closing prices for the S&P 500 since the start of 2023. The right chart shows the S&P 500’s average daily closing price over the prior 200 trading days over the same time frame. Ignoring the daily ups and downs of the market and focusing on the longer-term trend is a helpful way to reduce unforced anxiety and potential disruptions to a buy and hold strategy.

 

Get Invested: "Be Greedy When Others Are Fearful"
Mon, Mar 3, 2025

Our "Get Invested" series is a simple yet powerful resource designed to help anyone understand why investing in stocks for the long term is one of the best financial decisions they can make. The slide below from our Get Invested piece is titled "Be Greedy When Others Are Fearful."

One of Warren Buffett’s most famous quotes is to “be greedy when others are fearful.” Unfortunately, many anxious investors can’t stomach losses in the stock market, causing them to go to “all cash” at exactly the wrong times. Take large declines, for example. Since WW2, the S&P 500 has fallen more than 15% in nine different quarters. Following every single instance, the index was higher a year later with an average one-year gain of 25.1%. Similarly, the S&P 500 has had two-quarter drops of 20%+ just eight times, and over the next year, the index was up by at least 17% with gains every single time.

 

Where's the Weakness in Discretionary?
Mon, Mar 3, 2025

Entering the final month of the first quarter, most S&P 500 sectors are sitting on year-to-date gains, although there are two notable exceptions. The Tech sector is currently down 5.29%, which has dragged on broader market performance, given it's by far the largest sector by market cap. Consumer Discretionary is down an even worse 5.65% year to date, and returns look even worse when compared to the December 17th high. Since then, the sector is down just under 12%. As shown below, using the sector ETF (XLY) as a proxy for the group, that latest correction leaves it in no-man's-land between the 50 and 200-day moving averages with the recent low finding some support around the November post-election low.



Taking a look under the hood, breadth since that December high hasn't been that bad. Of the 50 stocks in the sector, half are higher, and half are lower since the high. However, there is a far larger weight in the losers than the winners. Among the decliners are the sector's largest names: Tesla (TSLA) and Amazon (AMZN). Given that the S&P 500 is weighted by market cap, those declines in the mega caps—namely the outsized 38.4% drop in TSLA shares—have acted as significant drags on broader index performance.



Zeroing in on Tesla (TSLA), the stock peaked a day after the Consumer Discretionary sector, closing at a 52-week high on December 18. Regardless, it's been a brutal period of selling since then. The stock's nearly 40% decline saw it crash through its 50-DMA, and in the past few days, it has found support at its longer term 200-DMA.



Again, the S&P 500 and its sectors use a market-cap-weighted methodology, meaning stocks with larger market caps (like Tesla) will have a greater impact on the index than smaller peers. That also makes equal-weight versions of the indices useful in canceling out some of that noise and providing a better look at breadth. As shown below, whereas the market-cap weighted sector ETF (XLY) is down 9.6% from a 52-week high, the equal weight version (RSPD) is down less than 3%. Furthermore, whereas XLY looks like a falling knife, RSPD has just been bouncing sideways along the 50-DMA. The latest lows for RSPD came right at the uptrend line off of last summer's lows. So all together, while the weakness in the Consumer Discretionary sector may cause some alarms to go off as a sign of stress for the consumer, the current situation is more looking like a lesson in index weighting methodologies and mega-cap volatility.

 

Get Invested: Don't Get Political
Tue, Mar 4, 2025

Our "Get Invested" series is a simple yet powerful resource designed to help anyone understand why investing in stocks for the long term is one of the best financial decisions they can make. The slide below from our Get Invested piece is titled "Don't Get Political."

Letting political beliefs get in the way of “buy and hold” has been extremely costly to investors. Going back 70 years, $1,000 invested in the US stock market only when a Republican is President would be worth $28,000 today. $1,000 invested only when a Democrat is President would be worth more than double that at $72,000. But that $1,000 would be worth almost $2 million today for those who put politics aside and stayed invested regardless of who’s in charge in Washington DC.

 

Why We Expect Some Green in March


“Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.” Warren Buffett, Chairperson at Berkshire Hathaway

Welcome to March and good riddance to February! In the end, February was a choppy and frustrating month, but this wasn’t a big surprise, as we wrote about and discussed all month. Are better times ahead? We think so, and March is the month of St. Patrick’s Day so maybe we should expect some green. Let’s get into it.

Not a Surprise, Don’t Panic
The second half of February was rough, as worries over the economy, tariffs, Washington drama and geopolitical concerns, and big cap tech weakness dominated the conversation. Here’s the thing. Yes, the year-to-date gains we saw in January might have mostly vanished, but as we’ve noted before, early in a post-election years things tend to be choppy. Not to mention February is a weak month historically, especially in a post-election year. So in a way, this is normal and not a reason to panic. Here’s one way of showing this.



Here’s another angle on the same thing that shows the first quarter of a post-election year is the second weakest quarter out of the entire four-year presidential cycle. In other words, after back-to-back 20% gains the past two years, maybe a well deserved break to kick off 2025 is perfectly normal.



Here Comes March
In the end, the S&P 500 fell 1.4% in February, but not before a 1.6% jump on the last day of the month, which checked in at the best last day of February since Leap Day in 1988. If things feel choppy, that’s because they have been. The S&P 500 was up in September, down in October, up in November, down in December, up in January, and now down in February. That is the first time in history we’ve seen those six months alternate between green and red and it is the longest such streak of alternating up and down months since seven in a row from February through August back in 2022.

We continue to think the bull market is alive and well and the economy is on solid footing, but that doesn’t mean we won’t have scary headlines or worries. Just two weeks ago we were writing about new highs. That may feel like a long time ago, but really it just happened.

As poor as February is historically (and that played out), it is worth noting that March and April are two of the better months of the year. The past two decades March is the fourth best month and April is the third best month. You should never blindly invest in seasonality, but just as February was ripe for potential trouble, be open to the possibility of a nice Spring bounce.



Looking at March the past four years, the S&P 500 has gained more than 4%, 3%, 3%, and 3%. Of course, in 2020 it lost more than 12% for the worst March ever and worst month since October 2008. Here’s another closer look at election years, which shows February is weak (check), but these next three months tend to be strong.



Panic Is in the Air
How are you feeling about markets right now? Hopefully because you’ve been reading our blog you know that even the best years have scary headlines and volatility and that volatility is the toll we pay to invest. But we’ve seen historic levels of fear in various investor sentiment polls over the past week, even with stocks less than 5% away from all-time highs.

The American Association of Individual Investors (AAII) Sentiment Survey showed more than 60% bears for only the seventh time in history (going back to when the poll started in 1987). Here’s the catch—those other times we saw this level of fear were times like the 1990 recession and accompanying near bear market; October 2008 and March 2009 during the Great Financial Crisis; and the end of the bear market in 2022. In other words, stocks were down substantially before fear truly spiked, making what we are seeing now truly rare and uncharacteristic.

Stocks were up about 28% on average a year after previous times bears were above 60% (and higher every time), so contrarian bells are ringing right now. To get a larger sample size, we looked at all the times bears spiked above 55% in the AAII survey. Once again, the returns going out a year were quite strong overall, but we did notice fear spiked in early 2008 and many of those returns were significantly lower a year later.

But assuming we aren’t heading into another financial crisis (we don’t think we are), the other times we saw this was quite bullish for investors willing to stay strong and not panic sell. The S&P 500 was up a median of nearly 13% six months later and 18% a year later.



The CNN Fear & Greed Index was recently beneath 20, consistent with levels of fear last seen near major market lows.



Why does sentiment matter? Because the market is all about what is (or isn’t) priced in. For example, large cap tech stocks reported strong earnings across the board, yet many sold off hard when earnings were announced. This was because the bar was set quite high, maybe too high looking back. When worry is in the air and uncertainty is high, this tends to be a bullish contrarian signal, as better news eventually comes and clears that lowered bar. Given our overall still positive economic backdrop, we think seeing this much worry in the air is actually rather bullish, which is why we don’t expect the recent weakness to spiral out of control.

 

Post-Election Years Plague Republicans

The fear on The Street is palpable and it’s hitting levels associated with interim lows and rebounds. We have warned all year that this type of chop and volatility is to be expected in post-election years, especially in Q1. With the S&P 500 dipping further into the red for the year, we turn to page 28 of the 2025 Stock Trader’s Almanac, “Post-Election Year Performance by Party.”

Historically, more bear markets and negative market action have plagued Republican administrations in the post-election year whereas the midterm year has been worse for Democrats. New republican administrations tend to come in and get down brass tacks more so than new democrats. This generates market uncertainty and Trump 2.0 has moved faster and further and covered more ground than any we can remember.