Why March is so volatile for stocks

It has since returned with a roar and is now up 2.5% in March. That S&P 500 grew by 2%. Technological Nasdaq scored 1%. At one point this month, the index fell as much as 9%.
March has often been a dramatic month for stocks. The dot-com boom of the late 1990s ended in March 2000 when Nasdaq has reached its peak and subsequently collapsed by more than 10% in the same month.
And just two years ago, stocks fell in March after the Covid-19 outbreak in America brought the US economy to a standstill.

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.

If you have the courage to do so, in March you can work hard. According to Data from Yardeni Research, which has studied returns since 1928, the S&P 500 is growing at an average of 0.5% per month. The stock rose 57 times in March during this time period and fell 37 times.

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.”

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