Hopeful signs despite a terrible start to the month?
The Great Recession (also known as the 2008 global financial crisis) peaked in March 2009. That same month, stocks bottomed after falling nearly 60 percent from their October 2007 high, ending a brutal bear market.
LPL Financial’s chief market strategist Ryan Detrick looked back at how the S&P 500 has performed 17 times since 1957, when the market fell in January and February, and found that stocks usually bounce back. The S&P 500 gained an average of 1.1% in March of those years and ended up up almost 4% over the past 10 months after falling in January and February.
“Seeing the first two months of the new year in the red is not a very pleasant feeling, but the good news is that it hasn’t been a major warning sign lately,” Detrick said in the report.
Soothing comments by Fed Chairman Jerome Powell on the economy following Wednesday’s Fed rate hike could also be good news for stocks through the end of March.
“There is no doubt that the beginning of the year was not easy,” said Angelo Kurkafas, investment strategist at Edward Jones. “Powell was positive about the strength of the economy and the ability of the market to withstand rate increases.”