Since 1970, January finished higher 33 times and fell 23 times, excluding this month’s increase of 1.37% (MarketWatch data, excludes reinvested dividends).
How accurate is the barometer? As illustrated in the table below, a positive January, coupled with a positive year, occurred 29 times since 1970. Simply put, when January finished higher, the S&P 500 gained ground 29 times. The average increase: 19%.
There were only four years in which January was positive, but the year finished lower. The average loss was 5.2%.
January and Full-Year Returns for the S&P 500 Index Since 1970
| Category | Number of Occurrences |
| January Higher, Year Higher | 29 |
| January Higher, Year Lower | 4 |
| January Lower, Year Higher | 13 |
| January Lower, Year Lower | 10 |
Data Source: St. Louis Federal Reserve, 1970 – 2025, dividends not included in S&P 500 returns.
Past performance is no guarantee of future results.
When January finishes in the green, the January Barometer has been a ringing endorsement for the full year, though less not discount the possibility of market pullbacks, as we saw in 2025.
Why is that? If the year begins on a favorable note AND indexes tend to move higher, bullish sentiment naturally has a tailwind at its back. Put another way, the bears are starting out at a disadvantage AND must overcome the market’s tendency to move higher.
Still, tools like the January Barometer are interesting signals, not guarantees. Market performance is still driven by economic fundamentals, as history has consistently demonstrated.
A strong start to a year can be derailed by policy missteps, recessions, rising interest rates, or other unexpected economic headwinds.
Elsewhere, the Federal Reserve surprised virtually no one on Wednesday by keeping its key rate, the fed funds rate, unchanged at 3.50 – 3.75%. Since the Fed began lowering rates at the September 2024 meeting, it has cut the fed funds rate by 1.75 percentage points.
Based on Fed Chief Jay Powell’s remarks, there was no indication that the Fed is considering a rate cut at its next meeting in March or in April, Powell’s final meeting before his term ends in May. Otherwise, the meeting offered few surprises. It was very much a steady‑as‑she‑goes affair.
On Friday, President Trump nominated former Fed Governor Kevin Warsh to be the next Federal Reserve chairman. He served as a Fed governor between 2006 and 2011. The decision was generally praised on Wall Street. He has, however, been a critic of the Fed in recent years.
While Powell has resisted the president’s call for much lower rates, Warsh has recently aligned himself with Trump. Historically, Warsh’s attention has been on inflation and sound money.
Remarks from a Fed chief can never be dismissed. He/she leads the world’s most powerful central bank. The Fed chair is influential but is one of 12 votes when setting policy.