– Stock market predictions are typically bullish in April.
The Stock Trader’s Almanac
, the SP 500 has climbed every single April since 2006 by an
average of 3.1%. Since 1950, it has been the best performing month
for the Dow Jones.
This monthly spike is usually attributed to strong Q1 earnings
reports hitting Wall Street. Numerous companies will also raise
their guidance figures for the full year in April.
This year, things aren’t as bullish in the short term. Our stock
market predictions today call for continued volatility into Q2.
Here’s what to watch in the
in April, as well as an update on the long-term outlook for
Stock Market Predictions: Short-Term Volatility Ahead
The markets were extremely choppy in March.
Through the month’s first 11 days, the
Dow Jones Industrial Average
dropped 3.6%. From there, it gained 2.6% through March 23. Another
dip of 2.3% followed through March 27. On Monday, March 30, the
DJIA climbed 1.5% in one day alone. The stock market ended March
down 1.9% on the month and down 0.24% for Q1.
That volatility will continue in April. And one of the biggest
reasons why is the Federal Reserve.
On Friday, March 27, Fed Chair Janet Yellen announced the
central bank will raise interest rates for the first time in more
than six years. There was no official date set for the rate hike,
and Yellen did mention the increase will happen slowly.
‘s Small-Cap Investing Specialist Sid Riggs says when the Fed does
begin raising rates “an inevitable short-term rate riot” will
occur. Again, investors can expect more volatility in the
Even before the rate hike was announced, every FOMC meeting was
sending the market into a frenzy.
“Traders are trying to digest [Yellen’s comments], and you’ve
seen that volatility just explode to the upside, to the downside,
now it’s going to go side-side for a little while as they really
try to figure out all the nuances,”
‘s Chief Investment Strategist Keith Fitz-Gerald said on March
Another reason today’s stock market predictions see a choppy
April is corporate earnings. Low
and a strong U.S. dollar are expected to weigh on Q1 earnings. The
Commerce Department estimated last week that after-tax corporate
profits dipped 1.6% in Q4 2014.
However, earnings should only lead to a temporary dip in the
“The good news is [earnings] probably don’t get a lot worse than
they are right now and the comparisons may actually get better,”
Wells Fargo Fund Management’s John Manley said on
. “I think that’s important to remember because I think the market
tends to look forward in these things.”
And while the markets will remain volatile through April, our
experts’ stock market predictions see the bull run continuing
through the rest of the year…continue reading to hear why…
Stock Market Predictions 2015: What’s in Store Long Term
While most investors worry about rising interest rates, Riggs’
research shows the Fed’s actions will actually send the markets
“Six out of the last seven periods during which the Fed was
raising rates, the markets actually went
– gaining an average 13.47% during the rising rate periods,” Riggs
said. “In fact, stocks have gone up in six out of the last six
periods when the Fed was in a rising rate environment.”
“The only time the SP 500 didn’t increase in value
alongside of rising rates was all the way back in the early 1970s,
when the Fed Funds Rate increased a whopping 9.21 percentage
points, from 3.71% to 12.92%,” he continued.
And even though Janet Yellen announced that rates would be
raised at a very slow pace, Riggs points out that the Fed only
raises rates when it believes the economy is strong enough to
absorb the increase.
“Critics say that the economy isn’t strong enough to withstand
an increase,” Riggs said. “I think they’re making a mountain out of
a molehill. If the economy does stall out when the Fed raises
rates, you can bet they’ll reverse course, lickity-split, and bring
rates right back down again. At which point, we’ll be right back
(or at least very close) to where we are now – with historic low
rates and traders pushing up equity prices in search of
The Bottom Line:
April has been the best performing month for the markets since
1950. This April will be more volatile than normal thanks to
disappointing corporate earnings and the Fed raising interest
rates. While that will cause short-term volatility, the Fed’s
interest rate hike will actually send the markets higher in the
long term. Our stock market predictions for 2015 see the bull run
continuing through the year.
Make More Money This Year, No Matter What the Market
You can make 2015 your wealthiest year in a few simple
You just need to know the three common investing habits
to dump immediately, the single most effective strategy for your
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Weak Q1 Earnings Will Be Brief Speed Bump, Market Watchers
Stock Trader’s Almanac:
April Almanac: Top Performing DJIA Month Since 1950
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