MW Investors who followed 'sell in May and go away' are missing what could be the best May for the S&P 500 in decades

By Christine Idzelis

The S&P 500 is heading for its best monthly performance since 2023 - and potentially its biggest gain since 1990

Investors heeding the adage "sell in May and go away" would have missed out on big gains this month in the U.S. stock market.

The S&P 500 index SPX has jumped around 6% in May based on trading levels late-morning Wednesday, with investors set to close out the last trading day of the month on Friday. That put the index on track for its biggest monthly gain since November 2023 and potentially its best May since 1990, according to Dow Jones Market Data.

"The old axiom in the stock market about selling your stocks at the close of April and buying them back at the start of November used to make some sense from a seasonality standpoint," when the U.S. was more of an industrialized economy, said market strategists at First Trust in a research note. But "over the last 20 years, an investor who remained fully invested in the S&P 500 from May through October enjoyed an average annual total return of 3.92% during those months alone, a significant figure when compounded."

The S&P 500 is seeing a strong rebound after three straight months of declines. Markets saw significant turmoil in early April after President Donald Trump's "liberation day" tariffs sparked fears of a recession and higher inflation, but large levies rolled out by the White House have since been paused as the White House aims for progress on trade negotiations.

"So far, the Trump administration has appeared to temper its more strident tariff policies in response to signs of distress in markets," Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management, said in a note Wednesday.

The U.S. stock market has responded favorably to pauses in tariffs, including those announced this month for steep levies on imported goods from China and the European Union.

Investors cheered the mid-May breakthrough in talks between the U.S. and China, which resulted in lower tariffs for 90 days. Then, over Memorial Day weekend, Trump said he was delaying a massive 50% tariff on the E.U. until July 9.

The S&P 500 rallied 2% on Tuesday as U.S. investors, on their return from the three-day holiday weekend, pushed stocks higher on the E.U. tariff pause. That marked the S&P 500's strongest gain since May 12, the day the stock market rallied on the positive outcome of the U.S.-China trade talks.

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"Back when the U.S. was more of an industrialized economy, it was common for plants and factories to close for a month or longer in the summer," the First Trust strategists said. "This downtime allowed businesses to retool and gave employees time to vacation."

That gave way to the "sell in May" theory, which was based on the idea that "companies would conduct less commerce in that six-month span, which would likely translate into lower earnings, and temporarily reduced stock prices," the strategists explained.

But today, the U.S. economy is "so technologically advanced and globally competitive that companies can no longer afford these extended periods of stagnation," they wrote.

Based on their research, the S&P 500 posted losses on a total return basis over the May through October period only three times in the past 20 years through 2024. Those losses came in 2008, 2011 and 2022, the strategists found, pointing to the table below in their May 1 note.

The table above also shows the top sector gains in May through October over the past two decades. Seventeen of those 20 top-performing sectors posted total returns exceeding 10% during that May-October stretch.

"Not all market maxims should be taken at face value," the First Trust strategist said. They said their research "does not support the notion that investors should 'sell in May and go away.'"

Other major U.S. benchmarks are also off to a strong start in potentially defying that old adage.

The Dow Jones Industrial Average DJIA has climbed 3.7% so far in May, while technology-heavy Nasdaq Composite COMP was on track to surge almost 10% this month, according to FactSet data show, at last check.

-Christine Idzelis

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May 28, 2025 12:13 ET (16:13 GMT)

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