Investors might want to brace themselves for more pain on Friday if past years of this infamous holiday are any indication. Here’s a look at what a Friday the 13th in the month of May has meant for the markets.
What Happened: The stock market is down year-to-date and in the middle of a correction that shows no end in sight. To make matters worse, this Friday is the first Friday the 13th, a day that for some coincide with bad luck, since August 2021.
“This is one of the worst starts to a year ever and now we have to worry about Friday the 13th,” LPL Financial Chief Market Strategist Ryan Detrick said.
The good news is the last four Friday the 13th occurrences brought positive daily gains for the broad stock market; The bad news is that when Friday the 13th happens in May, it hasn’t produced strong returns.
“Now the bad news: May hasn’t been kind to this day, down the past three times.”
Why It Matters: May ranks as the third-worst month for daily return on Friday the 13th. In 13 occurrences since 1928, the S&P 500 was down an average of 0.35% on Friday the 13ths that occurred in the month of May. This trails only October (-.49%) and November (-.50%) for the worst month on the infamous holiday.
The months of March and June rank as the two best for a Friday the 13th to happen with average returns of 0.56% and 0.55%, respectively.
This could mean that the S&P 500, which is tracked with the SPDR S&P 500 ETF SPY, trades down Friday to keep the May tradition alive. The SPDR Dow Jones Industrial Average ETF DIA could also continue to see pressure as large caps haven’t been safe by the market stumbles.
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What’s Next: Detrick points out that the S&P 500 has been in a correction since January 3 down 18%. The average correction is -14.9%, making the current correction worse than the average. The current correction has lasted 128 days, far more than the average of 88 days since 1980 for market corrections.
“If it feels like this year hasn’t had many green days, that is probably because that is quite true. In fact, in 2022, only 43.3% (39 out of 90) of the days have seen the S&P 500 Index finish higher,” Detrick said.
The good news for investors is the average one-year return from the low of a correction is 23.0% since 1980. The average two-year return from the low of a correction since 1980 is 37.5%.
Only two times out of 24 has the market been negative for the year after the correction, which could bring some hope to long-term investors.
SPY Price Action: The SPDR S&P 500 ETF is trading around $386.90 versus a 52-week range of $391.96 to $479.98.
Photo: "Anger Management" screenshot, courtesy of Columbia Pictures/Sony Pictures Releasing
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