by Jeffrey Buchbinder, Chief Equity Strategist & Team, LPL Financial
Additional content provided by Brian Booe, Associate Analyst, Research
Spring break came and went, and market watchers will soon turn their calendars and put April in the history books. This month, U.S. stocks experienced record trading volume, historic intra-day price swings, and widespread technical damage as a storm of uncertainty fueled a sharp equity market sell-off. Nonetheless, stocks held tough. At Mondayās closing bell with two trading sessions remaining this month, the S&P 500 was only 1.5% below where it began in April, clawing back a month-to-date decline that reached as deep as 11.5%.
Historically, April is one of the top three performing months on the calendar, alongside November and December. Some investors even closely monitor the so-called āApril effect,ā in which stocks receive a mid-month lift around Tax Day as investors make last minute retirement plan contributions and/or invest their refunds. This yearās āApril effectā is at risk of being overshadowed by tariff headlines, but with equity markets gathering some positive momentum to end a roller-coaster month, do April showers bring May flowers, or is April the key to blossoming a solid year for stocks?
Aprilās Historical Trends
While it may seem like a random result, April has printed a monthly gain nearly 71% of the time since 1950. In years when the S&P 500 delivered a positive price return during April, the remaining eight months of the year have added an average of 7.4% to seal an average full year advance of 13.5%. On the other hand, when April ended below the month-to-date flatline, stocks broadly treaded water for the rest of the year, printing just a 0.3% average gain, and shedding 0.2% on average over the full calendar year. This year, U.S. equities have picked up the pace as April 30 rapidly approaches, aiming for the monthly flatline and recouping losses following President Donald Trumpās tariff barrage from the White House Rose Garden. History would argue that if the S&P 500 is able to pull off this feat and April losses or gains turn out to be relatively mild (between -1% and 1%) the outlook isnāt quite as grim, with a 5.9% and 11.5% return for the remainder and full year, respectively. However, stocks would have to extend their five-day advance and pare back at least another 0.5% off losses to fall into this bracket, while facing quite the uphill battle through December.
S&P 500 Returns in April Since 1950
Source: LPL Research, Bloomberg 04/29/25
Disclosures: The modern design of the S&P 500 Index was first launched in 1957. Performance before then incorporates the performance of its predecessor, the S&P 90. All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.
Headwinds Are Likely to Stick Around this Year
A negative monthly return would mark the second consecutive April slide and the third over the last four years ā the S&P 500 closed April 2022 8.8% lower and April 2024 4.16% in the red. Annual declines in 2022 align with historyās suggestion, while 2024 bucks the trend. But markets donāt have the same tailwinds that powered 2024ās strong gains. Stocks began trimming gains in the wake of President Trumpās 90-day tariff reprieve, and investors noted common capitulation signals (washed out breadth readings, volume metrics) that could indicate a new floor was set. However, market bottoming is usually a relatively extended process, with stocks chopping along for several months before experiencing a meaningful uptrend, usually retesting the new lows along the way. Headwinds likely remain ahead given that tariff relief is still broadly temporary, and a concrete improvement in headlines has yet to be delivered. In markets, implied correlation (the relationship between price movements of S&P 500 constituents) remains elevated, which generally begins to recede as markets recover, making equities less prone to dramatic moves. Another Wall Street indicator that tends to track stock performance fairly well, the economic surprise index, only recently experienced some upside with the potential for future tariff-induced surprises ahead.
Conclusion
Unfortunately, history tells us April showers likely wonāt bring us May flowers. The old investor adage of āsell in Mayā also suggests U.S. stocks may continue to chop along in the near future, with the potential for more bouts of volatility in the months ahead. In fact, when the month of April closes in the red, May is generally flat with just a 0.1% loss.
Outside of historical data, the current macro backdrop remains challenging, and with only small concrete changes since the end of March. The LPL Research Strategic and Tactical Asset Allocation Committee (STAAC) remains tactically neutral toward equities. After the latest stock market rebound, the Committee has not ruled out the possibility of a reversal lower due to trade uncertainty and slowing economic growth. LPL Research continues to monitor tariff news, economic data, earnings, the bond market, and various technical indicators to identify a potentially attractive entry point to add equities.
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