S&P 500 Forecast: Will February’s Weak Seasonal Trend Cap Gains for US Indices?

Apple is among the most exposed companies to ongoing trade tensions. Morgan Stanley warned that the 10% tariff on Chinese goods, which took effect Tuesday, could create a 3.5% headwind to Apple’s earnings per share.

While Apple has begun shifting production to India, its existing facility there produces only 13% of iPhones, far from enough to replace the 67 million units shipped to the U.S. annually. There is speculation that the White House could grant Apple an exemption, as it did in Trump’s first term.

If Apple is forced to absorb the increased costs, it may have to raise iPhone prices by approximately 3%, which analysts estimate would amount to about an extra $1 per month for consumers over a typical two-year installment plan.

Is February a Historically Weak Month for Stocks?

Bank of America’s Stephen Suttmeier cautioned that February has historically been one of the weaker months for equities. Since 1928, the S&P 500 has posted a gain only 53% of the time in February, with an average return of -0.09%.

The trend is even weaker in the first year of a presidential term. Historical data shows the S&P 500 has risen just 46% of the time in such years, with an average return of -1.66%. However, seasonal trends typically improve moving into March and April.