April’s surprising market performance

03/31/21
  • April has been up more than any other month since 1991
  • Typical return has tended to be moderate, though
  • Holiday pattern in play starting Thursday?

Traders will be kicking off a new month before checking out early for a three-day weekend, so here’s a quick take on the US market’s historical trends in the fourth month of the year.

The one thing that leaps out when reviewing April’s track record is consistency: It’s been the most reliably bullish month of the year since 1991, with the S&P 500 (SPX) closing higher in 24 years out of 30 (80% of the time). It’s also been on an exceptional hot streak since 2006, having closed up 14 times in 15 years, with the last down April occurring in 2012—performance that may stir up “we’re due for a down April” sentiment among some traders:

Chart 1: S&P 500 (SPX) monthly winning percentages, 1991–2020. Stock market seasonal patterns. April up 80% of the time.

Source: Power E*TRADE


The other side of the coin: The typical April return has been good but not great. Over the past 10 years, April has been only the eighth-strongest month of the year, with a 0.9% median SPX return. Since 1991, though, the median April return has been 1.3%—the fifth-best month of the year:1

Chart 2: S&P 500 (SPX) median April returns, 1991–2020. S&P 500 historical performance. 5th-highest monthly return.

Source: Power E*TRADE


An interesting shorter-term note: Tomorrow is the first trading day of April, which has been an up day for the SPX 59% of the time since 1960. That represents a bit of a pivot from the last two days of March, both of which closed higher less than 45% of the time during that span (the jury is still out on today). But tomorrow is also the Thursday before Good Friday, which has had a better winning percentage over the past six decades, with the SPX closing higher 69% of the time.2

Market Mover Update: Even with the broad market in the red yesterday, many homebuilder stocks were in the green in the wake of the biggest one-month increase in the S&P Case-Shiller Home Price Index in 17 years.3 And one of the companies in the business of supplying those homebuilders, Builders FirstSource (BLDR), outpaced most of them, rallying more than 2% intraday (see “Sector deep dive”). The latest weekly mortgage applications tally is due out this morning, along with the monthly pending home sales number.

As long-term interest rates jumped in early trading yesterday, the biggest loser was once again tech—including chip stocks. One exception was Taiwan Semiconductors (TSM), which extend its bounce off last Wednesday’s breakdown low to nearly 6% (see “Chips and dips”).

Gold’s biggest down day in more than month dropped the yellow metal close to a potential support level: April gold futures (GCJ1) slid 2% intraday yesterday to $1,676.50, just a hair above the nearly one-year low of $1,673.30 they set on March 8.

Today’s numbers (all times ET): Mortgage applications (7 a.m.), ADP Employment Change (8:15 a.m.), Chicago PMI (9:45 a.m.), Pending Home Sales Index (10 a.m.), EIA Petroleum Status Report (10:30 a.m.).

Today’s earnings include: Walgreens Boots Alliance (WBA), Dave & Buster's (PLAY), Micron (MU), nCino (NCNO), Verint Systems (VRNT).

Today’s IPOs include: Flora Growth (FLGC), Coursera (COUR), Achilles Therapeutics (ACHL).

 

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1 Reflects S&P 500 (SPX) monthly closing prices, March 1991–April 2020. Supporting document available upon request.
2 Reflects S&P 500 (SPX) daily closing prices, March 1960–April 2020. Supporting document available upon request.
3 Bloomberg.com. Low Rates Fuel Biggest Home Price Surge Since February 2006. 3/30/31.

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