Super Bowl Indicator: Will a NFC Victory Boost S&P 500?
As the NFL’s Super Bowl LVII between the Philadelphia Eagles and the Kansas City Chiefs approaches, analysts are revisiting the decades-old Super Bowl Indicator to determine its impact on the stock market. The Super Bowl Indicator, which was first introduced by New York Times sportswriter Leonard Koppett in 1978, proposes that stock performance in the full year is impacted by the outcome of the Super Bowl.
Super Bowl Indicator: A Brief History
Koppett discovered that when the precursor of the National Football Conference (NFC) won the Super Bowl, stocks rose in the full year, but when the precursor of the American Football Conference (AFC) won, stocks fell. Ryan Detrick, Chief Market Strategist at CarsonGroup, recently sought to answer the question “Do Stocks Want the Eagles or Chiefs to Win?”
S&P 500 Performance Based on NFC Wins
Detrick found that the S&P 500 has gained 10% on average in the full year when an NFC team has won the Super Bowl. This year, if the Eagles, the NFC champions, were to win, it could result in a larger return for the benchmark stock index.
Investors’ Expectations After the Bear Market of 2022
Many stock investors are eager for a win in equities this year after the asset class took a hit in 2022 due to swift and large interest rate hikes by the Federal Reserve and recession worries. However, Detrick mentioned that stocks have gained the full year in 10 out of the past 11 times when an AFC team has won the NFL championship. In fact, the only year that stocks were lower was in 2015, when the full year ended down -0.7%, which was virtually flat.
Is a Victory by the Eagles or Chiefs Better for Stock Investors?
With these findings in mind, stock investors may prefer a win by the Chiefs, who have already won the Super Bowl in 1970 and 2020. However, Detrick cautions that investing based on the Super Bowl Indicator is not a foolproof strategy and that stock performance is influenced by various macroeconomic factors, including Treasury yields.
Current Market Conditions and Game Predictions
Before the big game, the S&P 500 has risen about 6% in 2023, and there has been a change in market leadership since the end of 2022. However, some analysts, including Katie Stockton, co-founder of Fairlead Strategies, warn that recent stock gains may be disrupted by macroeconomic shifts. As for the game itself, the Eagles are currently favored to win over the Chiefs, according to Caesars Sportsbook.