Next Wednesday is July 4th, and because the holiday falls right smack in the middle of the week, it is also likely to be a week where many people look to take extended weekends on either end of the holiday.  That doesn’t mean it will be a quiet week in terms of economic data, though.  Not only is next Friday the Non-Farm Payrolls report, but we’ll also be getting both the ISM Manufacturing (Monday) and the ISM Services (Thursday) reports, as well as FOMC Minutes (also Thursday). With fewer people at their desks and plenty of data, don’t be surprised if there is a pickup in volatility.

In terms of the US equity market’s historical performance during the week of July 4th, it has historically been positive.  Since 1945, the S&P 500 has seen an average gain of 0.71% during the week of July 4th with positive returns 70% of the time.  In years where the market was already up YTD heading into the holiday week, returns were even a little better at 0.78% with positive returns 75% of the time.  For these calculations, we have used the S&P 500’s returns from the Friday before July 4th to the Friday after.  In those cases where July 4th fell on a Friday or Saturday (in which case the markets were closed on the 3rd), performance was measured in the week before.

The chart below shows the S&P 500’s July 4th week returns since 1945.  Looking at the chart, what really stands out is how consistently positive the S&P 500 was in the 25 years that followed WWII.  From 1945 – 1969, the S&P 500 was up during the July 4th week in every year but one (1950), and in that one down year it only fell 0.11%.  Since then, though, the bullish trend for the week has waned.  While the S&P 500’s return is still positive, it has not been nearly as consistent to the upside with gains just 58% of the time.

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