The equity market has made a little bit history in the first three days in May. Only four other times in the last fifty years has the S&p500 opened May with three consecutive down days.
Bespoke did some great work yesterday analyzing the first two consecutive down days in the new month and we thought we’d add our two cents.
This year the S&P500 has experienced its 12th best run-up into May in the past forty years, up 8.43 percent from the beginning of the year to the end of April. The 1.19 percent loss in the first three days is the 6th worst start of the past forty-one Mays. In only two of these five years (not counting current year) has the S&P500 had a negative return from May to December. That was the case only in 2000 and 1981 when the run-up into May was negative and thus a continuation of a negative trend.
Bottom line? History doesn’t seem tell us much about the future after such a poor start in the month of May. We are more focused, however, on how poor China/Hang Seng and Brazil are behaving and monitoring commodities and bonds as a signal of any down shifting in the global economy. Recall last May’s nasty 8.20 percent growth scare correction, which, in fact, was the S&P500 worst May performance in forty years. Stay tuned! (click here if tables are not observable)