S&P 500 to Keep Shining? These March Patterns Forecast More Positive Returns Ahead

investing.com:

March could see the S&P 500 continue to post gains, historical patterns suggest. These trends have been proven right many times in the past, but only time will tell if they will continue to be reliable indicators.

The two historical patterns are as follows:

The Dow Jones is making some changes. Amazon (NASDAQ:AMZN) is stepping in for Walgreens (NASDAQ:WBA), and Uber (NYSE:UBER) is taking over from JetBlue (NASDAQ:JBLU).

Walgreens is getting the boot due to its poor profitability, plummeting by -58.22% since joining the index. In contrast, Amazon has soared by +178,602% since its stock market debut and inclusion in the index.

There's a common belief that entering an index benefits stocks, while exiting harms them. The logic is that when a stock enters a major index, passive management funds replicating the index must buy its shares to maintain accurate performance replication. Conversely, when a stock exits, funds are no longer obligated to hold its shares.

However, this belief isn't always proven right. For instance, the last time the Dow Jones saw changes was almost four years ago, with Salesforce (NYSE:CRM) replacing Exxon Mobil (NYSE:XOM). Since then, Exxon Mobil shares have seen an annualized return of +36%, compared to +9% for Salesforce.

Examining a study by Jeremy Siegel and Jeremy Schwartz, companies exiting the S&P 500 (1957-2003) outperformed, on average, the companies that entered the index. Similar trends were observed with stocks exiting the Russell 2000 (1979-2004) compared to those entering.

In reality, the logic behind index changes doesn't always hold. So, we should be cautious about assuming this rule always applies.

Wall Street has a list of stocks that could lift the Dow Jones this year.

Here are the