Memorial Day Week: Best and Worst Stocks to Own

Historically, the S&P 500 has shown mixed performance during Memorial Day week, with a long-term average gain of 0.5% since 1971, but a more recent average loss of 0.39% since 2010; however, the SPX's year-to-date performance leading up to Memorial Day has been a strong indicator for the rest of the year with gains above 5% resulting in an average 7.8% gain for the remainder of the year. Certain stocks, like American Tower (AMT) and Electronic Arts (EA), have shown consistent positive performance during this week, while bank stocks and brokerages have tended to underperform.

Analysis

Analysis of historical S&P 500 (SPX) performance reveals a nuanced outlook for Memorial Day week and the subsequent market trajectory. While the week following Memorial Day has historically averaged a 0.5% gain for the SPX since 1971, outpacing the typical weekly return of 0.17%, a more recent trend since 2010 indicates an average loss of 0.39% for the week itself, with positive returns occurring less than half the time. A day-by-day breakdown for the period since 2010, including the Friday before Memorial Day and the four-day holiday week, shows that only Thursday has averaged a gain (0.20%), while all other days, including the Friday preceding the holiday, have averaged losses; the Friday of Memorial Day week has been notably weak, averaging a 0.46% decline. Critically, the SPX's year-to-date performance leading into Memorial Day has historically influenced the remainder of the year; with the index stated to be up approximately 1% in 2025, it falls into a 'middle' range (+5% to -5% YTD) that has historically preceded an average 5% gain for the rest of the year with 70% positive returns. However, achieving a YTD gain above 5% before the holiday improves this outlook to an average 7.8% gain (83% positive), whereas a YTD decline greater than 5% has historically led to an average 3.5% loss. Specific stock trends over the past decade highlight American Tower (AMT) and Electronic Arts (EA) as consistent outperformers during Memorial Day week, positive in nine out of ten instances, with Real Estate Investment Trusts (REITs) also showing strength. Conversely, bank stocks and brokerages have typically underperformed during this period, a pattern consistent with the negative sentiment signal for BAC.

Key Decisions for Investors

• Investors should closely monitor the S&P 500's year-to-date performance leading into Memorial Day, as a rally pushing the index above a 5% gain for 2025 could signal a more bullish outlook for the remainder of the year, whereas a drop below a 5% loss could indicate potential for negative returns.
• Consider tactical allocations for Memorial Day week by potentially overweighting stocks with strong historical performance during this period, such as American Tower (AMT) and Electronic Arts (EA), or certain REITs, while exercising caution with bank and brokerage stocks which have historically underperformed.
• Given the recent trend of negative average returns for the SPX during Memorial Day week since 2010, particularly on the Friday of that week, and general weakness on other days except Thursday, short-term traders might consider defensive positioning or look for relative strength on Thursday.