4 Reasons Why the Market Could Be in For a Tougher-Than-Expected Year

investing.com:

Breaking its longest winning streak in nearly two decades, the S&P 500 experienced a downturn for the first time in ten weeks last week.

The catalyst behind this reversal was the release of the jobs report on Friday, which tempered expectations for swift and substantial interest rate cuts by the U.S. Federal Reserve.

Let's check out a few patterns below:

1. The customary Santa Claus rally failed to materialize last December. During this period, the S&P 500 declined by -1%, the Nasdaq by -2.6%, with the Dow Jones managing a marginal uptick of +0.1%, marking the market's worst performance on the final week of the year since 2015-2016, ending a seven-year streak of strong showings.

2. Another notable pattern is the performance of the first five trading sessions of the year, often seen as an indicator of the market's trajectory for the rest of the year.

Despite its seemingly arbitrary nature, historical data reveals a 69% correlation over the last 73 years between the market's performance in the first five trading sessions and the entire year.

3. In election years, like 2024, this correlation increases to 83%, having been fulfilled on 14 out of 16 occasions in the last election years.

When the S&P 500 recorded gains in these initial five days, the average return for the year stood at +14.2%. Conversely, when the index's performance in these days was negative, the average return for the year dropped to +0.3%.

4. The average yearly correction from high to low in the S&P 500 has been +14.2% since the 1980s. In 2023, the correction was +10.3%, yet the index concluded the year with a gain of over +24%. This underscores the importance of maintaining peace of mind and exercising patience. Could we be in for another correction this