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The stock market has steadily climbed this year, and as April approaches, investors have reason to expect more of the same given that month's track record for strong stock performances.
After gaining 24% last year, the — the benchmark index used to measure how stocks are performing overall — has continued its bullish run in 2024 by posting a nearly 11% gain through the first quarter of 2024.
This is welcome news for investors who have recently seen that index as well as the Dow Jones Industrial Average and the Nasdaq set record highs in the first quarter of the year.
However, overshadowing this is the uncertainty surrounding the Federal Reserve’s decision on when to begin slashing interest rates. According to data from the American Association of Individual Investors, sentiment pulled back from 51.7% bullishness in the first week of March to 43.2% bullishness through last week, demonstrating a more reserved outlook among investors.
But with April arriving, there’s new cause for optimism. Historically, April tends to be a great month for the stock market. And while past performance is never indicative of how stocks will behave going forward, looking at seasonality can provide insight into how stocks typically perform at certain times of the year.
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Is April a good month for the stock market?
According to Reuters, since 1945, April and December are tied as the best-performing months of the year for stocks, with an average return of 1.6%. (September is notoriously the worst, with an average loss of -0.6%.)
During recessions, April’s positive performances can be even more pronounced. In 2008 and 2009 amid the Great Recession, April produced returns of 4.8% and 9.4%, respectively. And in the wake of COVID-19’s arrival, April 2020 saw an enormous 12.7% gain — the 12th best monthly performance for the S&P 500 dating back to 1928.
One theory behind April's positive performance is that investors receive tax refunds that month and inject that money into the market pushing prices higher. No matter what the cause, April is historically such a strong month for stocks that it has only posted losses twice in the past 18 years (in 2012 and again in 2022 during an extended bear market) and was the best performing month in the year seven times dating back to 2001.
What April stock market trends mean for investors
Financial advisors contend that investors shouldn't base their strategies on seasonality and historical trends since they don't necessarily indicate what is likely to happen in the future. That’s why the old adage — time in the market beats timing the market — remains relevant today.
For example, pulling out of the market to avoid investing in September, historically the worst performing month of the year, may seem logical at first. Yet investors that did so in 2010 missed out on that month's 8.8% gain, which was the largest single-month increase that year for the .
For buy-and-hold investors, if the Fed's uncertainty is causing distress, keep in mind that over time stock prices tend to tick upwards, which has been the case with the S&P 500 in 68% of the years it has existed. Notably, a significant amount of those gains have come in the month of April.
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FAQs
One theory behind April's positive performance is that investors receive tax refunds that month and inject that money into the market pushing prices higher.
Is April a bad month for stocks? ›
April has been a lousy month for stocks. The S&P 500 fell 4.2% in April. That might change the investing calculus for the rest of the year a little bit, according to data compiled by Ryan Detrick , chief market strategist at Carson Group.
What is the seasonality of the stock market in April? ›
Monthly seasonality in S&P 500 (/ES)
April is a very bullish month for /ES, on a seasonal basis. Over the past 10 years, it has been the fourth-best month of the year for the index, averaging a gain of 1.81%. Over the past 20 years, it has been the best month of the year, averaging a gain of 2.27%.
What is the strongest month for the stock market? ›
Is April a good month for the stock market? According to Reuters, since 1945, April and December are tied as the best-performing months of the year for stocks, with an average return of 1.6%. (September is notoriously the worst, with an average loss of -0.6%.)
What time does the stock market move the most? ›
Market volume and prices can and do go wild first thing in the morning, precisely the first 15 minutes. People are making trades based on the news. Power hour between 3:00 pm and 4:00 pm is also a very popular time. The best time to buy stocks is 9:30 am to 11:00 am EST because the market is most liquid.
What are the two worst months for stocks? ›
NYSE Composite Seasonal Patterns
- Best Months: April, July, October, November, and December.
- Worst Months: January, February, June, August, September.
The month of September has been, on average, the worst month for the stock market going back more than a century.
Do stocks go up in April? ›
Historically, April tends to be a great month for the stock market. And while past performance is never indicative of how stocks will behave going forward, looking at seasonality can provide insight into how stocks typically perform at certain times of the year.
What is the 10 am rule in stock trading? ›
Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and the time between 9:30 a.m. and 10 a.m. often has significant trading volume. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.
What are the best six months in the stock market? ›
Stocks generally produce most of their returns during the six months of the year from Nov. 1 to April 30.
It is not a hard and fast rule, but rather a guideline that has been observed by many traders over the years. The logic behind this rule is that if the market has not reversed by 11 am EST, it is less likely to experience a significant trend reversal during the remainder of the trading day.
How much money do day traders with $10,000 accounts make per day on average? ›
With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].
What is the stock market prediction for 2024? ›
Big Money participants forecast a 12% jump in earnings per share for the S&P 500 in 2024, slightly ahead of consensus forecasts for an 11% increase.
What is the 3 day rule in stocks? ›
The 3-Day Rule in stock trading refers to the settlement rule that requires the finalization of a transaction within three business days after the trade date. This rule impacts how payments and orders are processed, requiring traders to have funds or credit in their accounts to cover purchases by the settlement date.
What month is historically the best month for stocks? ›
Since 1950, November has been the strongest month of the year for stock market performance.
Which month does the stock market go up? ›
November is the top month of the year, historically, with an average gain of 2.5% and moving higher 80% of the time. January, June, and September are often not great months for the stock market. “This is called the study of seasonality, and it is backward-looking.
Is April a good trading month? ›
According to Reuters, since 1945, April and December are tied as the best-performing months of the year for stocks, with an average return of 1.6%.
Is May a bad month for stocks? ›
“Over the last 10 years, May returns have averaged 0.7%, with nine of the last 10 months posting positive results.” May historically marked the start of the S&P 500's “worst six-month stretch,” according to Turnquist, who said that performance gives “some credence to the 'Sell in May and Go Away' adage.”
Why sell in May and go away? ›
The Wall Street maxim, popularized by The Stock Trader's Almanac, suggests investors should sell their equity holdings this month and re-enter the market in November, based on the historical tendency of stocks to underperform between May and October compared with the November to April period.
What's happening with the stock market today? ›
Stocks
| Index | Last | % Change |
|---|
| S&P 500 | 5,018.39 | -0.34% |
| Dow Jones | 37,903.29 | +0.23% |
| Nasdaq | 15,605.48 | -0.33% |
| FTSE 100 | 8,148.76 | +0.34% |
