Does a Strong January for the S&P 500 Mean a Good Year for the Market? Here's What History Says.

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stocks we like better than S&P 500 Index ›More than a week into 2026, and the S&P 500 (SNPINDEX: ^GSPC) is off to a positive start to the year. At this writing, it was up just under 2% to begin the year, potentially paving the way for a strong first month. A 2% return may be calming for investors who were worried about the stock market's high valuations as of the end of 2025 and about a possible bubble forming.But does a good start in January normally indicate that the stock market will have a good year overall? Below, I'll look at how the S&P 500 has done in previous years and whether January's performance can be a predictor for its performance for the entire year.Image source: Getty Images.I examined the data spanning 30 years to assess the S&P 500's performance for January and compared it to its annual performance. A good way to gauge the overall pattern is to examine the correlation, which indicates whether the data points move in the same direction.For the data I analyzed, the correlation between the index's performance in January and the entire year was approximately 0.42. That indicates a moderately positive relationship -- not a strong one. What this means is that, while a relationship is evident, investors shouldn't assume that January's performance will dictate the rest of the year's outcome.However, I also broke it down by different performance levels for the month and compared them to the full-year returns.S&P January PerformanceOccurrencesAverage Annual ReturnDown More Than -5%5-7.01%Down -2% to -5%510.57%Down Slightly (0 to -2%)21.76%Up Slightly (0 to 2%)616.42%Up 2% to 5%710.02%Up More Than 5%521.42%Calculations and table by author. Source: Google Finance, yCharts.What you may notice right away is that the worst annual return does happen if January's performance is really bad (down more than 5%). But as long as it isn't a horrible start out of the gate, then the index has averaged a positive return. At the other end of the extreme, when it's up more than 5%, that also normally leads to a strong average performance.The last big crash in the market that occurred was in 2022 when the S&P 500 declined by 19%. In January 2022, the decline was approximately 5.3%. Similarly, during the Great Recession, the S&P 500 fell by more than 6% in January 2008 and would go on to finish the year down a whopping 38%.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,940.01 -4.46 (-0.06%)Dow 3049,359.33 -83.11 (-0.17%)Nasdaq23,515.39 -14.63 (-0.06%)Russell 20002,677.74 +3.18 (+0.12%)VIX15.86 +0.02 (+0.13%)Gold4,595.40 -28.30 (-0.61%)Trending tickersBTC-USD Bitcoin USD 95,176.18 -597.41 (-0.62%)NVO Novo Nordisk A/S 62.33 +5.21 (+9.12%)SMCI Super Micro Computer, Inc. 32.64 +3.22 (+10.94%)APP AppLovin Corporation 568.76 -38.23 (-6.30%)VERO Venus Concept Inc. 8.00 +6.56 (+455.56%)PortfolioSign in to access your portfolioSign inTop gainersIBRX ImmunityBio, Inc. 5.52 +1.57 (+39.75%)AGX Argan, Inc. 383.66 +54.00 (+16.38%)RIOT Riot Platforms, Inc. 19.24 +2.67 (+16.11%)ASTS AST SpaceMobile, Inc. 115.77 +14.52 (+14.34%)FIGR Figure Technology Solutions, Inc. 73.91 +8.99 (+13.86%)Top losersZGN Ermenegildo Zegna N.V. 9.56 -1.46 (-13.25%)SSL Sasol Limited 6.31 -0.84 (-11.75%)TLN Talen Energy Corporation 371.66 -47.41 (-11.31%)CEG Constellation Energy Corporation 307.71 -33.42 (-9.80%)GTM ZoomInfo Technologies Inc. 9.04 -0.96 (-9.65%)Most activeIBRX ImmunityBio, Inc. 5.52 +1.57 (+39.75%)ONDS Ondas Holdings Inc. 12.16 -0.66 (-5.15%)NVDA NVIDIA Corporation 186.23 -0.76 (-0.41%)INTC Intel Corporation 46.96 -1.35 (-2.78%)BBAI BigBear.ai Holdings, Inc. 6.12 -0.05 (-0.81%)Top economic eventsEarnings eventsMy earnings eventsEarnings events