What History Says About Stock Market Performance in the Second Quarter
Key Points
Stocks have historically performed well during the second quarter.
However, the gains were largely because April has been an especially strong month in the past.
"Sell in May and go away" has some merit, but investors are still better off staying in the market.
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Five words investors frequently ask are: "What should I do now?" Those words are likely going through many investors' minds after a tumultuous first few months of 2026.
The Nasdaq Composite Index (NASDAQINDEX: ^IXIC) entered correction territory, with the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) coming perilously close. However, all three major indexes have rebounded nicely despite continued worries about the Iran war and the economy.
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So, what should investors do now? One answer is to look to the past. Here's what history says about stock performance in the second quarter.
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What history shows
The good news for investors is that the second quarter has typically been a pretty good one for the S&P 500. The bad news is that, based on history, the best part of Q2 is already past.
Yardeni Research found that April has been the second-best month for the S&P 500 since 1928, with an average monthly gain of 1.39%. Only July was better over the last 98 years, with the index rising an average of 1.71%.
April has been a strong month more recently, too. Carson Group chief market strategist Ryan Detrick analyzed the S&P 500's historical performance and concluded that the index has finished higher in April in 80% of the years over the last two decades.
There are theories as to why April has been such a great month for stocks. Many Americans have extra money from tax refunds that they could invest. Many companies report their first-quarter results in April, providing greater insight into how the rest of the year is expected to go.
But remember the adage to "sell in May and go away"? There's at least a grain of truth in the advice.
May has historically been the third-worst month for the S&P 500, according to Yardeni. Also, Fidelity Investments concluded that the S&P 500 averaged an increase of around 2% between May and October during the period from 1945 through April 2026. The index jumped roughly 7% between November and April.
The best lessons from history
What are the best lessons from history? I think two stand out.
First, present market dynamics and future expectations matter more than the past. Inflation, unemployment levels, interest rates, and geopolitical factors are more important than the calendar in shaping the economy and the stock market.
Second, staying in the market beats trying to time the market for long-term investors. The longer the time horizon, the higher the percentage is that the S&P 500 has historically delivered positive returns. Regardless of how stocks fare in Q2 of 2026, if you stay invested for the next 10 to 20 years, you should do quite well, if history is any guide.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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