For the stock market, today is the first day of the month, first day of the quarter, and first day of the half-year. It is also a short time before the US market is closed for the Independence Day holiday.
There is a strong seasonal effect in the days leading up to the July 4th holiday. But there is a twist to it. You cannot simply look at the calendar (July 1, July 2, July 3). Depending on which day of the week the holiday is on, there can be anywhere from 1 to 3 trading days in July ahead of the holiday. The pattern is more clear when you number the days sequentially.
Using the last quarter-century of data on the S&P 500, the first trading day in July – regardless of which calendar date that falls on – is strongly positive. The average return is 0.42% and more than three-quarters of these days were positive. Conversely, if there is a second trading day in July before the holiday, it is somewhat negative. In these cases, the average return is -0.27% with nearly twice as many losers as winners.
Only if the Independence Day holiday falls on a Thursday or Friday will the market will be open for business for three days in July. This has happened only 6 times in the last 25 years. These few data points are about as flat as you can get. Better to take the day off.