April Effect: Why Traders Love This Month

Here's something worth knowing: S&P 500 has gone positive in April for 15 out of the last 16 years. Over the past 50 years, April averaged a 2.21% gain—the highest of any month. Pretty wild, right?

Historically, April ranks third-best over the past century (after July and December), with the Dow gaining 1.46% on average and posting positive returns 62% of the time.

Why the April pump? A few theories:

• Tax refund season—people reinvesting money back into stocks
• Portfolio rebalancing—institutions dumping underperformers in March to satisfy quarterly reporting, then buying the dip in April
• Seasonal strength—November through April is traditionally the strongest period for equities

After a rough Q1, there's usually a bounce-back effect too. Investors feel they've oversold and pile back in during Q2.

But here's the catch: This is historical pattern, not prophecy. Macro headwinds (Fed tightening, yield curve inversions, geopolitical tension) can easily override seasonal trends. The economy matters more than the calendar.

TL;DR—April historically pops, but don't trade your strategy just for a seasonal pattern.