The stock market historically loves April. But the month’s track record of strong performances is uncertain this year after President Donald Trump’s back-and-forth tariff announcements have sent U.S. stocks into a frenzy.
Since 1971, April has been the second-best month of the year for the S&P 500. However, this year the month began with the index dropping 11.54% alongside a record two-day loss that wiped out $6.6 trillion in investor value. Then on Wednesday afternoon, the market rebounded when Trump reversed course and announced a 90-day tariff pause.
With uncertainty continuing to be a theme this year, how will April play out, and what does it mean for your portfolio?
Why April is historically a strong month for stocks
Historical data shows that April tends to be a top-performing month for the stock market, rewarding investors with an average return of 1.6% since 1945. As for why, the reasons remain hotly debated.
Some folks attribute the month’s strong performances to investors using their tax refunds to buy stocks, which can drive bullish momentum. Others point to the fact that April marks the start of the second quarter, when institutional investors redeploy cash after selling underperforming portfolio positions at the end of the first quarter.
Though a myriad of factors could contribute to April’s positive track record over the years, market performance ultimately depends on broader economic and geopolitical conditions.
“You can see quite a bit of variability depending on the economic backdrop and what’s going on in the world,” says Jordan Rizzuto, managing partner and chief investment officer of GammaRoad Capital Partners. “Taking a birds-eye view of April is actually a great example of that.”
That has been evidenced by the S&P 500’s mixed results over the past five Aprils:
- April 2020: 17.88%
- April 2021: 4.01%
- April 2022: -9.10%
- April 2023: 1.09%
- April 2024: -3.96%
In 2020, April saw an enormous gain as stocks bounced back from the pandemic-induced market crash. In 2022, the month’s sizable loss occurred during a nearly year-long bear market. Last year, April underperformed despite the S&P 500 ending 2024 with a gain of more than 23%.
In other words, it’s impossible to know why these seasonal trends happen.
What can we expect this month?
Historical data only serves as a reference point, not a crystal ball. In fact, most economists do not take market predictions seriously. This year, we can already see why.
Uncertainty around Trump’s widening trade war has soured market outlooks. The U.S. economy was already at a precarious tipping point leading up to last week’s extensive tariff announcement, largely due to the ongoing strain from global trade tensions, persistent inflation and mixed signals from key economic indicators.
“Right now, we’re in the unique position where all three of our risk measures for the S&P 500 are bearish,” says Rizzuto. “It is categorically the least favorable environment you can have for equity market risk.”
Rizzuto added that he expects the environment to be characterized by significantly higher volatility than what might be the case during a so-called calmer or more favorable market environment. This became clear when the market experienced upside volatility Tuesday morning and Wednesday afternoon, following dramatic losses at the end of last week. “It’s a double-edged sword,” says Rizzuto.
So, while April has historically been a strong month for stocks, the current economic environment certainly presents a few challenges. Trump’s heftier-than-expected tariffs have heightened market volatility, investors’ concerns and recession fears. Meanwhile, his decision to reverse course on Wednesday sent the major indices surging.
The lack of clarity has been reflected by the American Association of Individual Investor’s weekly sentiment survey, which currently shows 58.9% bearishness compared to just 22.2% bearishness this week one year ago.
For now, it’s important to exercise caution and maintain a diversified portfolio. Many unanswered questions remain, as demonstrated by Federal Reserve Chair Jerome Powell’s use of the word “uncertainty” 16 times during a press conference following the Federal Reserve’s decision to leave rates unchanged on March 19.
If only we had a crystal ball.
More from Money:
‘Anything Works in a Bull Market.’ But What About a Bear Market?
What Trump’s New Tariff Announcements Could Mean for Your Wallet
Will There Be a Recession in 2025? 60% of Corporate Execs Think So
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