Seasonally speaking, stocks could see a pullback as the calendar shifts toward March in a presidential election year. Wall Street started 2024 on a high note, with the S&P 500 Index, the Dow Jones Industrial Average and the Nasdaq Composite setting new records, in the case of the Nasdaq for the first time since 2021. But history shows that a downdraft it may have just begun. Typically, March can be a weak month, certainly in the second half, and this can kick off a period of seasonal weakness, according to the Stock Trader’s Almanac. An additional constraint this year is the seasonal decline that often occurs when an incumbent president runs for re-election. “March is known for coming in ‘like a lion, going out like a lamb,’ a little weaker on the other side,” said Jeffrey Hirsch, editor of the Almanac. “Stock prices had a propensity to fall, sometimes quite precipitously, during the final days of the month,” he wrote. Measured since its inception, the Russell 1000 Index has generally fallen by an average of 1.1% in March in presidential election years, the Nasdaq Composite has fallen by 1.6%, and the Russell 2000 Index of small caps by 3%, as the Almanac data shows. In every March since 1950, the S&P 500 index historically rises 1.1%, but the same month in presidential election years averages a smaller rise of 0.4%. Currently, the S&P 500 Index is trading around the 5,100 level. But Hirsch advised investors to watch S&P 500 support levels closer to 4,800, the previous all-time high, or 4,600, the summer of 2023 high. A buying opportunity Even so, Hirsch said a decline is certainly not “sinister”. That’s because Hirsch expects the S&P 500 to rise to 5,500 by the end of the year, so any dips could prove to be a buying opportunity for investors. Specifically, he expects markets to perform better in the second half of 2024, when investors will have more clarity on the path of interest rates after passing the seasonal low in March and some usual instability. In particular, stocks could rally later this year after investors learn the outcome of the November general election. The “market really loves it when we have an election where we can quickly know who won,” Hirsch said. “After the election, whatever happens, it’s in rally mode in November, December, and a little steeper if you’ve ousted an unpopular president — just that post-election rally.” A Strong February Hirsch isn’t the only one predicting that March’s consolidation will give way to further gains. Technically speaking, Katie Stockton of Fairlead Strategies wrote that her indicators “support consolidation in March in the context of positive medium-term momentum,” adding that she “has no indicators of a strong pullback at this time.” Sam Stovall, chief investment strategist at CFRA Research, said the S&P 500 could see a 5% to 8% pullback in March, arguing that stocks have not seen a significant “dial reset” since rising from the October lows. In fact, since January, when stocks finally recouped all of the bear market losses of 2022, the broader market is now up another 5%. However, Stovall predicts that markets could continue to rise after absorbing some of the recent gains. He noted that February ended with strong gains, as did January, a development he sees as bullish for markets. “[I]n the 21 times since World War II that we have had a positive January and February, the market was higher for the full year 100% of the time, with an average total return of 22%. This would mean another great year, not simply a good year, for markets in 2024.