China's Lunar Year or Spring Festival begins today, marking the start of the Year of the Dragon. Will the dragon, a symbol of good fortune in Eastern culture, breathe fire into the stock market in 2012?
The Chinese New Year is symbolized by a new animal from the zodiac calendar, determined in a 12-year cycle. Last year, for example, was the Year of the Rabbit and 2010 was the Year of the Tiger.
Since the start of the S&P 500 index in 1928, dragon years have been significantly strong for both the Dow Jones Industrial Average and S&P 500, with a yearly average gain of 9.65 percent and 7.34 percent, respectively.
Within the Chinese zodiac, the year of the dragon ranks as the sixth strongest year for the Dow industrials and fifth best for the S&P 500.
Historically, U.S. markets appear to perform the best in the Years of the Pig — most recently celebrated in 2007, when the S&P 500 reached an all-time high — and fare the worst in the Year of the Snake, last observed in 2001.
Below are the average percentage changes for the Dow industrials and S&P 500 according to the Chinese calendar dating back to 1928. Pigs and tigers rule, while snake years tend to be the worst of all.
- Best Chinese New Year for the S&P: 1935, when it jumped 58 percent. It was the Year of the Pig.
- Best Chinese New Year for the Dow Industrial Average: 1933, when it soared 71 percent — it was the Year of the Rooster.
- Worst Chinese Year for the Dow Industrials and S&P 500: 1931, when both indices lost 53 percent and 49 percent, respectively. It was the Year of the Sheep.