Why April Could See the Stock Market Move Even Higher

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The banal marketplace has steadily climbed this year, and arsenic April approaches, investors person logic to expect much of nan aforesaid fixed that month's way grounds for beardown banal performances.

After gaining 24% past year, nan S&P 500 — nan benchmark scale utilized to measurement really stocks are performing wide — has continued its bullish tally successful 2024 by posting a astir 11% summation done nan first 4th of 2024.

This is welcome news for investors who person precocious seen that scale arsenic good arsenic nan Dow Jones Industrial Average and nan Nasdaq group grounds highs successful nan first 4th of nan year.

However, overshadowing this is nan uncertainty surrounding nan Federal Reserve’s determination connected erstwhile to statesman slashing liking rates. According to information from nan American Association of Individual Investors, sentiment pulled backmost from 51.7% bullishness successful nan first week of March to 43.2% bullishness done past week, demonstrating a much reserved outlook among investors.

But pinch April arriving, there’s caller origin for optimism. Historically, April tends to beryllium a awesome period for nan banal market. And while past capacity is ne'er suggestive of really stocks will behave going forward, looking astatine seasonality tin provide insight into really stocks typically execute astatine definite times of nan year.

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Is April a bully period for nan banal market?

According to Reuters, since 1945, April and December are tied arsenic nan best-performing months of nan twelvemonth for stocks, pinch an mean return of 1.6%. (September is notoriously nan worst, pinch an mean nonaccomplishment of -0.6%.)

During recessions, April’s affirmative performances tin beryllium moreover much pronounced. In 2008 and 2009 amid nan Great Recession, April produced returns of 4.8% and 9.4%, respectively. And successful nan aftermath of COVID-19’s arrival, April 2020 saw an tremendous 12.7% summation — nan 12th champion monthly capacity for nan S&P 500 making love backmost to 1928.

One mentation down April's affirmative capacity is that investors person taxation refunds that period and inject that money into nan marketplace pushing prices higher. No matter what nan cause, April is historically specified a beardown period for stocks that it has only posted losses doubly successful nan past 18 years (in 2012 and again successful 2022 during an extended carnivore market) and was nan champion performing period successful nan twelvemonth 7 times making love backmost to 2001.

What April banal marketplace trends mean for investors

Financial advisors contend that investors shouldn't guidelines their strategies connected seasonality and humanities trends since they don't needfully bespeak what is likely to hap successful nan future. That’s why nan aged adage — clip in nan marketplace thumps timing nan marketplace — remains applicable today.

For example, pulling retired of nan marketplace to debar investing successful September, historically nan worst performing period of nan year, whitethorn look logical astatine first. Yet investors that did truthful successful 2010 missed retired connected that month's 8.8% gain, which was nan largest single-month summation that twelvemonth for nan S&P 500.

For buy-and-hold investors, if nan Fed's uncertainty is causing distress, support successful mind that complete clip banal prices thin to tick upwards, which has been nan lawsuit pinch nan S&P 500 successful 68% of nan years it has existed. Notably, a important magnitude of those gains person travel successful nan period of April.

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