U.S. stocks are off to a rough start in 2022, which history shows could signal weak returns ahead. After a nearly 27% rally in 2021, the S & P 500 is down 3% and counting in January. Rising interest rates and lackluster corporate earnings have weighed on equity markets and continued to hit the market on Tuesday. For more than half a century, the first month of the year has served as a fairly reliable indicator of how the index will finish the year. "As the S & P 500 goes in January, so goes the year," Jeffrey Hirsch writes in the Stock Trader's Almanac. Since 1950, the "January Barometer" has proven true for all but 12 years, according to the almanac. Notable exceptions include 1966 and 1968 during the Vietnam War, 2001 in the wake of 9/11, a new bull market in 2009, and the past two pandemic-era years. Every down January since 1950 was followed by "a new or continuing bear market, a 10% correction, or a flat down" — except for 2021, according to the almanac. On average after a down first month, the S & P 500 pulls back 13% from its January close to its 11-month low. The index closes the year 1.1% lower, on average, after a down January. "Down Januarys were followed by substantial declines ... providing excellent buying opportunities later in most years," Hirsch said. —CNBC's Nate Rattner contributed to this report.
A trader works on the floor of the New York Stock Exchange at the closing bell January 14, 2022, in New York, New York.
Timothy A. Clary | AFP | Getty Images
U.S. stocks are off to a rough start in 2022, which history shows could signal weak returns ahead.