The first month of 2026 began on a generally positive note for equities, though the ride was not without days of heavy volatility. Below are the January returns for the popular benchmarks that investors track (Data provided by Y-Charts & Commonwealth Financial Network):

S&P 500 Index:+1.4%
Dow Jones Industrial Average: +1.7%
Nasdaq Composite Index: +0.9%
Russell 2000 Index: +5.5%
S&P Target Risk Moderate: +1.46%

We’ve often discussed the importance of how the stock market begins the year. Two indicators we closely monitor each January are the First Five Days of January and the January Barometer. Historically, when the S&P 500 is higher over the first five trading days of the year, the market has shown a greater likelihood of finishing the year with positive returns. Conversely, a weak start has tended to tilt the odds toward a more challenging year.

One of our favorite sayings in the market is “As January goes, so goes the year”. When the S&P 500 ends January higher, the probability of a positive full-year outcome increases; when January is negative, the year has historically been more difficult.

The chart below highlights every instance since 1950 in which the S&P 500 gained at least 1% during the first five trading days of the year and finished January in positive territory. Historically, these conditions have been associated with strong returns the rest of the year.

That said, it is important to note that the most recent negative year following this setup was 2018, which coincided with a midterm election year. While the historical data is overwhelmingly positive, it does not eliminate the possibility of a meaningful drawdown at some point this year. Periodic pullbacks are a normal part of market cycles, and we should expect some degree of volatility ahead. It would not be unusual for such weakness to emerge later in the first quarter or into early second quarter.

Below is a chart of the S&P 500’s average calendar-year return over the past 20 years. As the data illustrates, it is not abnormal to experience drawdowns at some point over the next few months. Looking back to last year, for example, stocks declined meaningfully from late February through early April before recovering.

I don’t have a dog in the fight for the Super Bowl on Sunday, so I just hope it is an entertaining game to watch! Let us know who you are rooting for!

As always, don’t hesitate to contact our team with any questions.