NEW YORK — If the stock market holds to a pattern it has followed for most of the past 40 years, 2010 could be a big year for investors.
Since 1973, a big advance on the first trading day of January has been a strong sign stocks will post robust gains for the rest of the year.
On Monday, upbeat news about manufacturing lifted the Dow Jones industrial average 155 points, or 1.5 percent.
The Standard & Poor’s 500 index rose 17 points, or 1.6 percent.
When the S&P 500 has gained more than 1 percent on the first day of trading, the index has ended the year higher 86 percent of the time, according to Schaeffer’s Investment Research.
After a big first day, the average yearly gain in the S&P 500 index has been 14.7 percent. That is important because the index is the yardstick for the overall market and for many investments such as mutual funds.
Despite concern that stocks might have outpaced underlying economic fundamentals during the market’s vibrant recovery last year, bulls say share prices can keep moving higher as long as economic news is good.
“It’s tough to argue against a continued drift upward,” said Dan Greenhaus, market analyst at Miller Tabak & Co. in New York. “The things that have been working are continuing to work.”
The Dow industrials rose 155.91, or 1.5 percent, to 10,583.96. The Standard & Poor’s 500 index rose 17.89, or 1.6 percent, to 1,132.99, while the Nasdaq composite index rose 39.27, or 1.7 percent, to 2,308.42.
Still, trying to predict the year based on the first day of trading is dicey. Over the past 20 years, the S&P 500’s first-day move, regardless of its size, correlated with how the index finished the year just 11 times. Six of those years saw the market advance, while five saw it slide.
And as investors are well-aware, there are plenty of potential obstacles that could pull the market back down, including the December employment report coming Friday from the Labor Department. Other threats include the struggling real estate market and expectations of rising interest rates.
Analysts agree that the huge gains of 2009 — when the S&P 500 index jumped 64.8 percent in nine months to end the year with a gain of 23.5 percent — have almost no chance of being repeated this year.
