Summer Stock Market Trends
May 21, 2025
“A few patterns investors may want to watch.”
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Summer is around the corner and there are some well-known seasonal stock market trends associated with warmer months. Although these are general patterns and certainly not guaranteed outcomes, we thought the treads are worth a quick review.
Here are the key summer-related trends:
Sell in May and Go Away
- This old adage suggests that stock market returns tend to be weaker from May through October compared to November through April.
- Backed by some historical data, especially in U.S. and European markets.
- The idea is to reduce exposure during the typically lower-performing summer months and reinvest in the fall.
Lower Trading Volume
- Summer often sees reduced trading activity due to vacations and holidays (especially in the U.S. and Europe).
- Lower volume can lead to higher volatility and less liquidity, which may impact price movement.
Calmer Markets – But Watch for Surprises
- With fewer traders active, markets can be relatively stable for long periods of time – until unexpected news hits, such as geopolitical events or earnings surprises, which can cause outsized moves due to thin trading.
Earnings Season Still Matters (July)
- Q2 earnings (reported in July) can create major market moves.
- Tech stocks often dominate the headlines, so summer can be bullish if big names outperform expectations.
Some sectors tend to perform better in summer, including:
- Energy (due to increased demand and oil price fluctuations)
- Others, like utilities or healthcare, may lag during risk-on summer sentiment.
- Consumer discretionary (due to travel and tourism)
While they can offer useful insights, seasonal trends should never replace sound strategy and risk management. It’s more productive to see them as context in broader portfolio planning.
Please keep in mind this information should not be considered as financial advice. Investment decisions should be based on individual research and consultation with a qualified financial professional. The value of investments can fluctuate, and past performance is not indicative of future results. Always consider your risk tolerance and financial goals before making investment decisions. US citizens have unique tax requirements which should always be reviewed with a professional.
