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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 bullish month? ›
Since 1950, the strongest months for stocks, on average, have been April and November. However, it's not always this way. For example, in April 2024, the S&P 500 monthly return was negative.
What month of the year is the stock market highest? ›
NYSE Composite Seasonal Patterns
- Best Months: April, July, October, November, and December.
- Worst Months: January, February, June, August, September.
The Best Month to Buy Stocks
Data showing average monthly returns for the S&P 500 between 1950 and 2023 shows that broadly, November, July, April, and October tend to be the best months to buy. Conversely, September and February have tended to see weaker performances than the other months.
Why are stocks moving higher? ›
In general, strong earnings generally result in the stock price moving up (and vice versa). But some companies that are not making that much money still have a rocketing stock price. This rising price reflects investor expectations that the company will be profitable in the future.
Is April a good month to trade? ›
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%.)
How is the stock market doing in April? ›
Major stock indexes fell in April, ending a five-month run of gains. for the S&P 500. The S&P 500 dropped 4.2% at the end of April from a month earlier.
What is the 11am rule in trading? ›
The 11 am rule in trading refers to a guideline followed by some traders, particularly day traders, which suggests avoiding making significant trading decisions or entering new positions during the first hour of the trading day (9:30 am to 10:30 am EST) and waiting until around 11 am EST to assess market direction and ...
What is the 10 am rule in stock trading? ›
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. For example, if a stock closed at $40 the previous day, opened at $42 the next, and reached $43 by 10 a.m., this would indicate that the stock is likely to remain above $42 by market close.
What is the slowest month in the stock market? ›
It's true: September is the worst month for US stock market returns on average. We analyzed US stock market performance as far back as 1926 and found that the average return for September has been -0.85%. Over the same time period, every other month has had positive average returns.
The equity market stumbled in April as the S&P 500 decreased by -4.1%, breaking the streak of five consecutive positive months. The 2024 year-to-date return is now +6.0%. The S&P also suffered its largest decline of the year when the index fell by -5.4% from the beginning of the month through April 19th.
Is May a bad month for stocks? ›
"Sell in May and go away" is an old market adage, popularized by the Stock Trader's Almanac, revealing the best six months of the year for stocks (they used the Dow Index) occurred from November through April. It suggested investors should sell in May and wait until November to buy back into the markets.
Will the stock market correct in 2024? ›
The S&P 500 generated an impressive 26.29% total return in 2023, rebounding from an 18.11% setback in 2022. Heading into 2024, investors are optimistic the same macroeconomic tailwinds that fueled the stock market's 2023 rally will propel the S&P 500 to new all-time highs in 2024.
Should I pull my money out of the stock market? ›
Key Takeaways. While holding or moving to cash might feel good mentally and help avoid short-term stock market volatility, it is unlikely to be wise over the long term. Once you cash out a stock that's dropped in price, you move from a paper loss to an actual loss.
Is 2024 a bull market? ›
As the midpoint of 2024 nears, the stock market forecast for the next six months still looks bullish, building on the same layers of support that have pepped up stocks all year. Though risks remain, the reasons for the hopeful mood stack up like tiers of a layer cake. The resilient economy serves as the base.
Is April the best month for the stock market? ›
In the last 20 years, April has been one of the best months of the year for the stock market in terms of average return and the frequency of higher indices movements.
What is April Awareness month for? ›
April is National Minority Health Month, Stress Awareness Month and Move More Month featuring National Walking Day. Walking is one of the most versatile forms of exercise, because you can do it just about anytime, anywhere. These tips will help you get your walk on at the right time for you.
Is April a financial awareness month? ›
April is National Financial Capability Month. Originally designated as National Financial Literacy Month in 2004, this observance has evolved to focus on financial literacy and ensure that Americans have access to unbiased and trustworthy financial education and understanding of financial services and products.
What is the weakest month for stocks? ›
In fact, since these indices were first established, September has earned a reputation for being a historically weak month for returns. Going back to 1928, the S&P 500 has declined an average 1.2% in September, the weakest month of the year for stocks.
