US Stocks Likely To Open Higher Following A Sell-Off, 'This Choppy Start To 2025 Isn't Abnormal. Don't Panic,' Says Expert Highlighting Seasonal Weakness In The First Quarter After Elections

As the U.S. stock market wrapped up a volatile week, investors are bracing for another choppy start to 2025. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed lower on Thursday, following two straight days of gains that boosted the S&P 500 to record highs. However, experts like Ryan Detrick, the chief market strategist at Carson Research, are advising investors not to panic, as this choppy start to a post-election year is not abnormal.



The first quarter of a post-election year tends to be "quite weak" for U.S. stocks, as highlighted by Detrick. This seasonal weakness can be attributed to several factors, including market uncertainty, seasonal factors, and momentum and election cycles. Markets dislike uncertainty, and the period leading up to an election is often characterized by high uncertainty. Once the election is over, investors can better navigate the environment with more clarity, which can lead to a market ramp higher in the months following the election.

Historically, the May through September period tends to be the weakest for stocks. Average monthly price returns during those months are approximately 0.10%, versus roughly 1% for all other months. This is often referred to as the "Sell in May and Go Away" phenomenon. Additionally, in past election cycles, summer weakness often shifts to the fall. This is because political junkies may be fixated on every primary machination, but most people, including most investors, pay far less attention until the party conventions begin and the fall campaign starts. It is at this point that polls become more significant, and investors start to pay more attention to the implications of the potential outcomes.



Despite the seasonal weakness in the first quarter following presidential elections, investors should not panic. This pattern is not a guarantee of future performance, and markets are dynamic and can be influenced by various factors, including geopolitical events, economic data, and company-specific news. However, understanding these historical patterns can help investors make more informed decisions and navigate the market's volatility.

In conclusion, while the U.S. stock market may experience a choppy start to 2025 following a sell-off, investors should not panic. The first quarter of a post-election year tends to be weak due to market uncertainty, seasonal factors, and momentum and election cycles. However, understanding these historical patterns can help investors make more informed decisions and navigate the market's volatility. As Detrick advises, "This choppy start to 2025 isn't abnormal. Don't panic."