In-depth Analysis

Can love conquer the markets?

St. Valentine’s day is that time of the year when we profess our love for our spouses or significant others in more lavish and extravagant ways. Today we’ll be talking about the chemistry between Valentine’s day and Markets.

Chocolates, roses, and gifts are the golden standard. But ever wondered if the tons of sweet delicacies move the global market tickers? Let’s find out.

Valentine’s spending craze

One of the more predictable sides of St. Valentine’s is the increase in spending leading to a bullish run on the US market. From consumer goods to luxury items, alcohol, and chocolates, certain companies do see an uptick in their shares.

Even during a continuous global pandemic that has claimed millions of jobs and shaken economies, consumers aren’t cutting back on gift spending when it comes to celebrating romantic occasions. You don’t have to be a long-time trader to know the impact that Valentine’s Day has on the economy. In 2019 alone, people spent more than $20.7B. The following year the number increased to $27.4. In 2021 the pandemic forced many to spend less resulting in a total of $21.8. But in 2022 there are slow signs of improvement, the estimated projections are in the ballpark of 24B.

The boogeyman 

Valentine’s day is something the global markets are carefully monitoring. The holiday is seen by many as crucial for Wall Street, Nasdaq, and other foreign exchanges because it could shed light on the biggest boogeyman of the year: inflation. The recent turbulent stock movements resulted in certain major indexes suffering big percentage drops.

A historic perspective 

Historically, the holiday has been bearish for stocks in general, but not all sectors are negatively affected. February has been the second most bearish month for stocks during the year. More than half of the time, the Dow Jones has closed in positive territory during Valentine’s Day. 50% of the time, the Dow Jones has closed the month of February in negative territory.

However, more often the S&P 500 has closed to the downside during February 14th and frequently it has closed the month of February in negative territory. The NASDAQ has outperformed the Dow Jones and the S&P 500 during Valentine’s Day. Oftentimes, the NASDAQ has closed in positive territory during February 14th, but only half of the time it has closed the month of February to the upside.

More recently we are seeing a sizable market recovery from its previous lows. Investors hope that inflation will soon be just a bad moment. However, volatility remains high as investors are predictably cautious.

Watch our video to learn more about the love affair of St. Valentine’s day and the markets.

 

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