July 4th Week Returns: Fireworks Or A Flop?

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by: Bespoke Investment Group

With July 4th coming around next Tuesday, we wanted to provide an update on market returns during the July 4th holiday week. Can we expect fireworks or a flop? The table below lists the S&P 500's returns during the week of July 4th going back to 1990. For each year, we calculated the S&P 500's return from the Friday before July 4th to the Friday after, and in those years where the 4th fell on a Friday, we calculated the return from the Friday before (6/27) through the Thursday before (7/3). As shown in the results, the July 4th week has been a positive one for equity markets, with the S&P 500 averaging a gain of 0.59% (median: +0.79%) and positive returns two-thirds of the time. The best July 4th week actually came back in 2010 when the S&P 500 was up over 5%. What was interesting about that week is that the strong performance came even as economic data during the week was skewed towards the negative side. Also, on the prior Friday, a well-known market strategist made a headline-grabbing call to sell stocks due to the worsening outlook for the US economy.

Given the S&P 500's strong first half returns in 2017, we also looked at how the market performed in July 4th weeks that followed a strong first half. In the twelve prior years where the S&P 500 was up more than 5% in the first half of the year, July 4th week saw an average gain of 0.97% (median: 1.07%) with positive returns in all but two instances.

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