Start of Summer Snoozing
Equities have pared earlier gains and are now up only modestly on the session as of this writing. Such a slow start to what is unofficially the first day of summer trading (the day after Memorial Day) is not unusual though. In the charts below, we show the average and median performance of the S&P 500 during each day of Memorial Day week since 1971 when Congress changed its observance to be the final Monday of May. As shown, the S&P 500 has actually fallen more often than it has moved higher on the Tuesday after Memorial Day with a median decline of 12 bps (average gain of 17 bps). Fortunately, Wednesday through Friday has tended toward more positive trading with positive performance around 60% of the time for each day.
Using daily intraday data going back to 1983, below we show the composite performance of the S&P 500 throughout Memorial Day week. This too shows that the holiday shortened week typically gets off to a somewhat slow, albeit positive, start on Tuesday as the gains typically don’t pick up steam until Wednesday.
Again, in spite of slow starts coming back from the holiday, historically the week of Memorial Day has seen the S&P 500 move higher. In fact, it is a decently strong period relative to the rest of the year. As shown in the screenshot of our Seasonality Tool below, the median one week performance of the current date ranks in the 76th percentile of all one week periods of the year over the last ten years. However, lending to the “sell in May and go away” saying, forward one month returns from here have been much more lackluster, ranking in just the 15th percentile.
