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After a Strong Month for Stocks, Here's Where the Market Could Be Heading in February

By: Sarah Hansen
Editor: Brad Tuttle
Published: Feb 02, 2023 3 min read

Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.

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After major losses for the stock market in 2022, January brought a serious rebound for investors.

The S&P 500 is up 6% since the beginning of the year, and the Dow Jones Industrial Average is up about 1.8%. The tech-heavy Nasdaq, which struggled the most and was down some 30% in 2022, ended the month with gains of more than 11%.

But will the rally continue? Here’s what history says about how the market tends to perform in February.

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What the data shows

A recent analysis by Bespoke Investment Group shows that historically, the stock market tends to gain in the first half of the month of February and lose in the second half. On average, the gains tend to be slightly larger than the losses:

  • Between 1985 and 2022, the S&P 500 ended the month of February up 0.37%.
  • Over the last 10 years, that gain rose to 0.43%.

In the years when the market does well in January, Bespoke found, those losses in the second half of February tend to be smaller.

What experts say

That bodes well for the stock market in the month to come, says Brad McMillan, chief investment officer at Commonwealth Financial Network.

  • McMillan points to the fact that the major risks to the market that have been worrying investors — high interest rates, the potential for a debt default and a recession — are likely to ease over the course of the year.
  • “In six months things are likely to look much better than they do now in most ways, giving the markets a boost toward year-end,” McMillan wrote in a recent blog post.
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Keep in mind

No one has a crystal ball when it comes to the stock market. If you’re investing for the long term, financial experts generally recommend creating plan that aligns with your goals and risk tolerance and sticking with it — regardless of month-to-month fluctuations in the market.

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