April marks the end of the “Best Six Months” for DJIA and the S&P 500. From the last trading day of October, through yesterday’s close, DJIA was down 3.19% while S&P 500 was down 1.63%. This well below historical average performance during the “Best Months” is due largely to surging inflation, a tightening Fed and Russia’s invasion of Ukraine. But before the “Worst Months” arrive, April’s solid historical track record could keep the current rally intact.
April 1999 was the first month ever to gain 1000 DJIA points. However, from 2000 to 2005, “Tax” month was hit, declining in four of six years. Since 2006, DJIA has been up in April sixteen years in a row with an average gain of 2.9%. S&P 500 has been up 15 of the last 16 with an average gain of 3.1%. April is the #1 month of the year for DJIA and S&P 500 since 1950 and third best for NASDAQ (since 1971).
The first half of April used to outperform the second half, but since 1994 that has no longer been the case. The effect of April 15 Tax Deadline (April 18 for 2022) appears to be diminished with numerous bullish days present on either side of the day. Traders and investors are clearly focused on first quarter earnings and guidance during April. With conflict in eastern Europe and the Fed raising rates, companies may lean conservative with guidance during this upcoming earnings season.
Typical midterm-election year woes have tempered April’s performance since 1950. April is DJIA’s and S&P 500’s seventh best month in midterm-election years, up 12 of the last 18. Russell 2000 ranks highest at fifth best in midterm-year Aprils. Sizable losses exceeding 4% on DJIA and S&P 500 occurred in 1962, 1970 and 2002.
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