Seasonality may not be the only market catalyst, but it is something to keep an eye on. The Daily Breakdown analyzes the January Effect.
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Seasonality Stats
Seasonality can be hit or miss in the market. Investors are generally familiar with a few of the better-known patterns, such as volatility often picking up in September or November–December tending to be the strongest two-month stretch for US equities. Interestingly, that was not the case in 2025, which serves as an important reminder about seasonality: these are probabilities — not certainties — based on historical performance. While certain outcomes may be more likely at specific times, there is no guarantee they will play out as expected.
January Barometer
There are two widely followed January measures. The first is the “First Five Days,” which looks at whether the S&P 500 finishes higher or lower during the first five sessions of the year. The second is the January Barometer, which measures the index’s performance for the full month.
The January Barometer is a market adage suggesting that the stock market’s performance in January sets the tone for the rest of the year. Popularized by the Stock Trader’s Almanac, it is often summarized as: “As goes January, so goes the year.”
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The Stats
Going back to 1950, when the first five days of January were positive, the S&P 500 finished the year higher about 82% of the time. When the index gained more than 1% in that stretch — as it did this year, rising 1.1% — it ended the year higher 87% of the time, with a stronger average return (15.7% versus 14.2%).
Notably, when the first five days of January were negative, the S&P 500 finished the year higher only about 55% of the time.
The January Barometer tells a similar story. Since 1950, when the S&P 500 ended January higher, it finished the full year higher 89% of the time (41 out of 46 occurrences), with an average annual gain of 17%. Negative Januarys may be even more telling: when the index finished January lower, it ended the year down 50% of the time (15 out of 30 occurrences), with an average full-year return of -1.7%.
The Bottom Line
Seasonality is useful context, but it should not be relied on in isolation. Markets are influenced by many factors — including earnings, economic growth, employment, and geopolitics — that ultimately shape annual outcomes. While it would be unwise to base decisions solely on the calendar, seasonality trends can be a helpful tool when combined with other market indicators.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.