The Turn-of-the-Month Effect: What the S&P 500 Did on the First Trading Day of Every Month Since 1950

The first trading day of the month has a reputation. Money arrives in retirement accounts, funds put new cash to work, and the index is supposed to drift up. The next one is Monday, November 2, which also opens the historically strongest six months of the year, so it seemed worth checking the claim rather than repeating it. We took every S&P 500 close since January 1950, 19,319 trading days, labeled each day by its position in the month, and counted. The effect is real, it is larger than the weekday and month effects we have measured before, and it has partly survived into this century. It is still not a reason to trade on a calendar. Education, not advice.

What is the turn-of-the-month effect?

The tendency for stocks to earn most of their return in a small window around the month boundary: the last trading day of one month and the first few of the next. It was first documented by Josef Lakonishok and Seymour Smidt in 1988 in the Review of Financial Studies on Dow data back to 1897, and the usual explanation is cash flow: paychecks, 401(k) contributions, pension and fund purchases, and month-end portfolio rebalancing all land in the same few days.

What we measured, 1950 to 2026

• The first trading day averages +0.138% and rises 59% of the time. The second day averages +0.124%, the third +0.103%. The last two days of the month average about +0.08% each.
• Every other day of the month averages +0.019% and rises 52% of the time. The first day's average is seven times the average of the rest of the month.
• The four-day window, last day plus first three, is 19% of trading days. Compounded on their own, those days would have turned $100 into about $5,055 since 1950. The other 81% of days, compounded on their own, about $910. Price only, no dividends, and an illustration rather than a strategy: nobody can buy only those days without paying the spread and tax on every round trip.

That split is the finding. Most of the market's price gain since 1950 arrived in the days around the month boundary, and the middle of the month, three weeks out of every four, was close to flat on average.

Has the turn-of-the-month effect survived?

Published anomalies tend to fade once they are known, so we re-ran the table on the 26 years since January 2000 and on the years since 2010.

• The first day held. Since 2000 it averages +0.157% and rises 62% of the time; since 2010, +0.141% and 60%. Both are stronger, not weaker, than the 1950-to-2026 average.
• The wider window faded. The four-day window since 2000 averages +0.057% a day against +0.026% for the rest of the month: still ahead, but a gap of three hundredths of a percent rather than nine. Since 2010 the gap is smaller again (+0.070% against +0.047%).

By decade, the first day's average was 1950s +0.23%, 1960s +0.06%, 1970s +0.01%, 1980s +0.04%, 1990s +0.29%, 2000s +0.18%, 2010s +0.14%, 2020s +0.14%. It was weakest in the 1970s and 1980s and strongest in the 1950s and 1990s, which does not look like a rule that is quietly disappearing. It looks like a tendency with wide swings around it.

Which month's first day is strongest?

Grouping the 922 first days by calendar month gives a second, smaller pattern, and November leads it.

• November 1 (or the first trading day after it): +0.33% on average, up 67% of the time, the strongest first day of the year. July is next at +0.28% (up 73%).
• September and December are the only negative ones: -0.06% and -0.02% on average. August is flat.
• 2026 so far: the first day has risen in eight of ten months, the exceptions being July (-0.22%) and September (-0.71%). The largest was August 3 at +1.48%.

November 2 this year sits one business day after the strongest six months of the year begin and five days after the Fed's October 28 decision. Whatever the first day does, the month's history says more about the next six months than the first session does.

The worst first days

A 59% up rate means two first days in five fall, and the falls are not small when the market is already in trouble. The worst first days since 1950: 2008-12-01 (-8.93%), 2009-03-02 (-4.66%), 2020-04-01 (-4.41%), 2002-09-03 (-4.15%), 1998-10-01 (-3.01%). The best: 2020-03-02 (+4.60%), 2002-10-01 (+4.00%), 1978-11-01 (+3.97%), 1998-09-01 (+3.86%), 2008-04-01 (+3.59%). Three of the five worst and two of the five best fell inside the 2008 to 2009 and 2020 crises, which is the usual reminder that calendar effects are averages, and averages are made of outliers.

Why the first of the month is different

• Cash arrives on a schedule. Payroll contributions to 401(k) plans, automatic brokerage deposits and pension inflows are invested within a day or two of the month boundary. That demand is predictable and it is one-directional.
• Funds rebalance at month end. Managers who are underweight equities after a strong month in bonds, or vice versa, trade on the last day and the first day.
• It coincides with news. The ISM manufacturing survey lands on the first business day and the jobs report on the first Friday, so the first sessions of the month carry more scheduled information than the middle ones.

None of this requires anyone to be fooled, which is one reason the effect has lasted longer than the Monday effect, which depended on the timing of bad news and died once that timing changed.

What this should change about your trading

Not your entries. A first-day edge of a tenth of a percent, even at a 59% hit rate, is smaller than the intraday swing of a normal session and much smaller than a stop. Buying on the first because it is the first is a calendar rule, and the whole record above is a record of averages that individual days ignore. The market goes up on most days anyway.

Maybe your expectations. If you watch an account closely, a flat middle of the month is normal and a strong first three days is normal. Knowing that keeps you from reading a story into three quiet weeks.

Your cash deposits, a little. If you add money monthly, the data says the market tends to be slightly higher on the first than on the 15th, so a deposit that lands mid-month buys at a marginally better average price. The difference is small and it is dwarfed by the lump sum versus dollar-cost averaging decision, which is about being invested at all.

Your sizing, not at all. The worst first day in the record was a 9% drop. A position that can take that is sized by its own rules, not by the date.

JorgAI does not time the calendar. It enforces the stop, the position cap and the daily loss brake inside your own brokerage account on the first of the month and the fifteenth alike. Set your rules once; the dates take care of themselves.

Quick answers

Is the first trading day of the month good for stocks? Historically yes. Since 1950 the S&P 500 has averaged +0.14% on the first trading day and risen 59% of the time, against +0.02% and 52% for days outside the turn of the month. Since 2000 the first day has been stronger still.

What is the turn-of-the-month effect? The tendency for most of the market's gains to arrive on the last trading day of a month and the first three of the next. Those four days are 19% of trading days and, compounded on their own since 1950, account for far more of the S&P 500's price gain than the other 81%.

Does the turn-of-the-month effect still work? Partly. The first day has stayed strong since 2000. The wider four-day window still beats the rest of the month, but by much less than it did before 2000.

Which first day of the month is best? November, averaging +0.33% and rising 67% of the time since 1950. September and December first days average slightly negative.

Data: S&P 500 daily closes from Yahoo Finance, January 3, 1950 through October 16, 2026 (19,319 trading days), our own count; a day's position in the month is its rank among that month's trading days, so holidays shift the dates. Returns are close-to-close and price-only. Lakonishok and Smidt (1988), Review of Financial Studies, is the original study. Past patterns do not predict future returns. This article is education, not investment advice.