Leap day 2024 is fast approaching, leading investors to question whether a date associated with quirky traditions holds any significance for a stock market that has seen a strong start to the year.
Historical Trends
Historical data suggests that leap days may not be so fortunate for stock-market investors. Both the S&P 500 (SPX) and Dow Jones Industrial Average (DJIA) have tended to experience declines on Feb. 29, a date added to the calendar in leap years occurring every four years.
Despite this trend, it’s important to take these observations with caution. The sample size is relatively small, making it less compelling for statistically-minded traders to draw concrete conclusions.
Potential Implications
Matthew Weller, the global head of research at City Index and Forex.com, highlights the importance of noting the possibility of lower-than-usual stock market returns on leap day. Recent trends show that stock indexes have decreased on each of the last three leap days when the markets were open. Notably, Feb. 29 fell on a Saturday in 2020, during the most recent leap year.
As we approach Leap Day 2024, keeping an eye on historical patterns can provide valuable insights for investors navigating the markets.
Leap Day and the Stock Market
Historical Trends
According to Dow Jones Market Data, the S&P 500 has shown a median fall of 0.3% on leap days dating back to 1952, while experiencing a median rise of 0.05% on all other days since 1950. The S&P 500 has only seen positive performance on four leap days, accounting for 31% of the time, compared to a 52% positive rate on regular days.
Comparison with the Dow
The story is similar for the Dow, which has recorded a median decline of 0.13% on leap days in contrast to a median 0.05% gain on regular days. The Dow has only been up 38% of the time on leap days, compared to 53% on all other days.
Current Market Performance
As we approach leap day this year, stocks are entering with strong momentum. Both the Dow and S&P 500 have achieved numerous record finishes in 2024. By the latest data, the Dow had surged 2.2% in February and 3.4% year-to-date, while the S&P 500 was up 4.8% in February and 6.5% since December 31.
Caution for Bulls
While acknowledging the limitations of sample size in this analysis, there is statistical evidence suggesting that the stock market historically underperforms on leap days. With recent strong performances in U.S. indices over the past month and beyond, caution may be warranted for bullish investors.
