The fiscal cliff was averted by lawmakers this week, prompting a rally in the stock market today, with the S&P 500 and Dow both up nearly 2 percent and the NASDAQ up 2.67 percent. But will the rally last?
If we look at historical data, we find that ’13 may not be as unlucky as it seems. In fact, since 1900, the S&P gained an average of 7 percent in years ending in “3,” versus an average of 6.8 percent for all years, according to Sam Stovall, chief equity strategist at S&P Capital IQ.
The best year was 1933, when the index was up 47 percent, while it declined 18 percent in the worst year—1903. Of course, that's a big range. In years ending in “3,” equity prices rose 55 percent of the time, versus an average of 66 percent for all years.
“These results aren’t bad, but they are nowhere as good as the years ending in “5,” which never declined and recorded an average price appreciation of 24 percent,” Stovall said.