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“What can a first impression tell us about anyone? Why, no more than a chord can tell us about Beethoven, or a brushstroke about Botticelli.” – Amor Towles

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Asian markets were the first to react to the Venezuela news from Saturday, and the response was positive. Japan’s Nikkei rallied 3% while China’s Shanghai Composite tacked on 1.4%, and South Korea surged 3.4%. India was a notable laggard in a sea of green as IT firms in the country declined after some cautious comments regarding the sector from Citi.

In Europe, the tone to start the week has been more subdued. The STOXX 600 is up 0.3% on modestly negative breadth. Germany is leading the way higher with a gain of 0.6% while Spain is fractionally lower.

In the US, S&P 500 futures are up nearly 0.30% while the Nasdaq is doing much better with a gai of over 0.6%. Treasury yields are little changed, and surprisingly, crude oil is only up fractionally. Gold is surging more than 2% while other metals prices are all up by at least twice that. Even crypto is catching a bid as Bitcoin is up over 1.5% and near $93K. If you’re a bull, it’s nice to see a positive reaction to the weekend news on the first real full trading day of the year, but we’ll be watching to see if the gains can be held through the trading session, which is a job the market has had a tougher time of doing in recent weeks.

With the start of every new year, investors tend to pay a lot of attention to first impressions. A strong start to the year raises hopes of a strong year, while weakness out of the gate causes investors to ask whether the market knows something for the year ahead. With the S&P 500 trading higher on Friday, the logic says that it should bode well for the rest of the year. Right?

Whether stocks trade up or down to start the year is basically meaningless in the grand scheme of things. Going back to 1953, which was the first full year of the five-day trading week in its current form started, we looked to see how the S&P 500 performed on the first trading day of the year and then compared it to how it performed over the next week, the rest of January, the rest of the quarter, the rest of the half, and the rest of the year.

The chart below shows the S&P 500’s median performance following days when it was positive on the first trading day of the year (blue bars) and negative (red bars). Over the following week as well as the rest of the month and quarter, the S&P 500’s median performance was actually better following a down day to start the year than after a positive start. For the rest of the half and the rest of the year, though, performance was better following a positive start to the year. In both cases, though, the difference in returns was modest.

In terms of the consistency of gains based on first-day performance, the S&P 500 has been positive on a slightly more consistent basis following a negative start to the year, versus a positive start. Once again, though, the differences are modest at best.

Not only have first impressions had little bearing on how the market performed going forward, but in recent years, it’s been the opposite. The scatter chart below compares the performance of the S&P 500 on the first trading day of the year (x-axis) to its performance for the rest of the year (y-axis). The random scattering of the dots provides another illustration of the lack of correlation.

One exception, however, has been the last five years (red dots). From 2021 through 2025, the S&P 500 traded down on the first trading day of the year four out of five times. 2022 was the only year that the first trading day was positive, when the S&P 500 traded up 0.64% to kick off the year. From the close on that first day through year-end, the S&P 500 dropped 19.95%. In the four other years when the S&P 500 traded down on the first trading day of the year, the S&P 500 rallied anywhere between 16.7% and 28.8% for the rest of the year. You would never base a prediction for the outcome of a baseball game on whether the first pitch was a ball or a strike, so don’t base your outlook for the year on which way the market trades on a day when most people were out of the office anyway. Even if it was higher.