S&P 500 closing above 5,881.63 on 1/8 (Wed) key to "first 5 days" -- don't let recency bias fuel bearish views. Array ( [cookie] => 64339e-577078-d73aae-f85cf3-774645 [current_usage] => 1 [max_usage] => 2 [current_usage_crypto] => 0 [max_usage_crypto] => 2 [lock] => [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 0 [reason] => Usage under limits [method] => ) 1 and can accesss 1

VIDEO: We are closely watching the S&P 500 close on Wed 1/8 as this invokes the “rule of first 5 days”

Please click below to view our Macro Minute (duration: 4:50)

The “rule of 1st 5 days” is invoked by Jan 8th (Wed) and S&P 500 closing above 5,881.63 will be something we are watching. We have long written about how we watch this metric as it often directionally signals how stocks will do for the full year.

• Since 1950, when looking at the “first 5 days”:
  – if S&P 500 positive (1st 5), full year +13%
  – win-ratio 82% (n=28)
  – if S&P 500 negative (1st 5), full year +3%
  – win-ratio 54% (n=13)
• These stats are even better if S&P 500 gains >1% “first 5 days”:
  – since 1950, n=18
  – full year gain +16%, win-ratio 83%
• And directionally, over the past decade, this rule has worked:
  – since 2015
  – when S&P 500 positive first 5 (n=7)
  – S&P 500 gained 5 of 7 years
  – only losses were 2015 and 2018, 2018 Fed “hawkish”
  – other 5 were 2017, 2019, 2020, 2021 and 2023
  – those 5 were 20% or better for full year
• See the point? It is a good omen if the S&P 500 closes >5,881.63 by Wed January 8th.
• Our base case is this will be the case. That is, simply because the calendar has turned to 2025 doesn’t mean equities should suddenly weaken.
• Granted, equities have struggled since the Fed’s “hawkish rate cut” on Dec 18th, equity markets have bled lower. In fact, in the past 12 trading sessions, equities were down 8 of those 12 days. Wow. That is painful.

• The most important point we would make is that we do not believe inflation is re-surging, as many are fearing and as implied by the rise in US 10-year yields. While the rise in yields is somewhat puzzling, we do not think inflation is suddenly strengthening in 2025.
• We have discussed the rationale in past reports, but it comes simply down to looking at 4 key drivers of inflation the past 5 years:
  – housing –> weakening
  – auto insurance –> softening
  – used cars –> not accelerating, except for hurricane “panic demand”
  – labor markets –> Fed noted not inflationary now
• So, there would need to be a “new driver” of surging inflation. If one points to tariffs, keep in mind:
  – tariffs are “one-time” rise and not a permanent rise in rate of change
  – Trump won on high inflation and doubtful he wants inflation

• The key macro data this week is the Dec jobs report, out on Friday:
  – 1/6 Mon 9:45 AM ET: Dec F S&P Global Services PMI    58.5e
  – 1/6 Mon 10:00 AM ET: Nov F Durable Goods Orders MoM    -0.4%e
  – 1/7 Tue 8:30 AM ET: Nov Trade Balance    -$78b
  – 1/7 Tue 10:00 AM ET: Dec ISM Services PMI    53.5e
  – 1/7 Tue 10:00 AM ET: Nov JOLTS Job Openings    7745ke
  – 1/8 Wed 9:00 AM ET: Dec F Manheim Used Vehicle Index
  – 1/8 Wed 2:00 PM ET: Dec FOMC Meeting Minutes
  – 1/10 Fri 8:30 AM ET: Dec Non-farm Payrolls    160ke
  – 1/10 Fri 10:00 AM ET: Jan P U. Mich. 1yr Inf Exp    2.8%e
• The most closely watched will be the Dec jobs report and 160k would be a deceleration from the +227k from November.

• There is Fed speak this week as well. No Powell, but:
  – 1/6 Mon 9:15 AM ET: Cook Speaks on Economic Outlook, Financial Stability
  – 1/7 Tue 8:00 AM ET: Barkin Speaks to Raleigh Chamber   
  – 1/8 Wed 8:30 AM ET: Waller Gives Speech on Economic Outlook   
  – 1/9 Thu 9:00 AM ET: Harker Speaks on Economic Outlook   
  – 1/9 Thu 12:40 PM ET: Barkin Speaks to Virginia Bankers Association   
  – 1/9 Thu 1:30 PM ET: Schmid Speaks to Economic Club of Kansas City   
  – 1/9 Thu 1:35 PM ET: Bowman Reflects on 2024 in Speech   

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Key incoming data January:

• 1/2 9:45 AM ET: Dec F S&P Global Manufacturing PMI Tame
• 1/3 10:00 AM ET: Dec ISM Manufacturing PMI Tame
• 1/6 9:45 AM ET: Dec F S&P Global Services PMI
• 1/6 10:00 AM ET: Nov F Durable Goods Orders
• 1/7 8:30 AM ET: Nov Trade Balance
• 1/7 10:00 AM ET: Dec ISM Services PMI
• 1/7 10:00 AM ET: Nov JOLTS Job Openings
• 1/8 9:00 AM ET: Dec F Manheim Used vehicle index
• 1/8 2:00 PM ET: Dec FOMC Meeting Minutes
• 1/10 8:30 AM ET: Dec Non-Farm Payrolls
• 1/10 10:00 AM ET: Jan P U. Mich. Sentiment and Inflation Expectation
• 1/13 11:00 AM ET: Dec NY Fed 1yr Inf Exp
• 1/14 6:00 AM ET: Dec Small Business Optimism Survey
• 1/14 8:30 AM ET: Dec PPI
• 1/15 8:30 AM ET: Dec CPI
• 1/15 8:30 AM ET: Jan Empire Manufacturing Survey
• 1/15 2:00 PM ET: Jan Fed Releases Beige Book
• 1/16 8:30 AM ET: Dec Retail Sales Data
• 1/16 8:30 AM ET: Jan Philly Fed Business Outlook
• 1/16 10:00 AM ET: Jan NAHB Housing Market Index
• 1/17 9:00 AM ET: Jan M Manheim Used vehicle index
• 1/17 4:00 PM ET: Nov Net TIC Flows
• 1/24 9:45 AM ET: Jan P S&P Global Manufacturing PMI
• 1/24 9:45 AM ET: Jan P S&P Global Services PMI
• 1/24 10:00 AM ET: Jan F U. Mich. Sentiment and Inflation Expectation
• 1/24 10:00 AM ET: Dec Existing Home Sales
• 1/27 8:30 AM ET: Dec Chicago Fed Nat Activity Index
• 1/27 10:00 AM ET: Dec New Home Sales
• 1/27 10:30 AM ET: Jan Dallas Fed Manuf. Activity Survey
• 1/28 9:00 AM ET: Nov S&P CoreLogic CS home price
• 1/28 10:00 AM ET: Jan Conference Board Consumer Confidence
• 1/28 10:00 AM ET: Dec P Durable Goods Orders
• 1/29 2:00 PM ET: Jan FOMC Decision
• 1/30 8:30 AM ET: 4Q A 2024 GDP
• 1/31 8:30 AM ET: Dec PCE Deflator
• 1/31 8:30 AM ET: 4Q Employment Cost Index

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023: