Stocks Are Moving Into Their Best Season — Could They Break Current Record Highs?
Written by
John Csiszar
Edited by
Jenna Klaverweiden
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After the stock market’s back-to-back years of 20%-plus gains, many investors were expecting the stock market to take a breather in 2025. But as of Nov. 10, the surprisingly resilient S&P 500 is up about 16%, dangerously close to the 20% level once again.
With the seasonably favorable November-to-April season just arriving, the question remains — will the market continue surging to new highs, or will it run counter to its typical pattern and come up short? Here’s a look at both sides of the argument.
Also see experts’ top predictions for the 2026 stock market.
How Strong Is the Seasonal Pattern?
The six months from November through April have historically provided much higher returns than the May-through-October period. How much? Check out this data assembled by Fidelity Investments:
- The S&P 500 has provided an average return of about 7% from November through April, but only 2% from May to October.
- The Russell 2000, which is composed of small cap stocks, has done even better, returning an average of 9% during this more favorable period.
While these are merely averages and anything can happen in any year, the long-term effect is pronounced. This historical track record has given rise to the popular mantra, “Sell in May and go away,” suggesting that investors should avoid this seasonally weak period.
The Case for More Record Highs
If you’re looking for positive catalysts for the stock market, you don’t have to look too far.
Companies have reported solid earnings all year, the Federal Reserve has begun cutting interest rates (with more likely to come) and investor confidence is high. The Trump administration is also very pro-market, enacting business-friendly policies that investors love.
As long as all of these factors remain in place, the market will likely continue to make new highs.
Potential Warning Signs
By any measure, stocks have had quite a run for nearly three years straight. Nearly every analyst will tell you that valuations are stretched and the market is priced for perfection. If earnings begin to slow or if the market is surprised in any way, stocks may fall sharply.
Respected financial publication Barron’s noted that the Nasdaq index trades at a near-record 28 times forward earnings, essentially pricing the index for perfection and leaving very little room for error. And after a historically strong performance during the supposedly weaker six months of the year in 2025, the end of the year could run counter to trend.
What Should Investors Do?
Put it all together, and many investors are uncertain about whether the market will continue to surge higher or finally fall into a long-overdue correction. If you count yourself in that camp, here are some steps you can take to protect yourself while still participating in any potential upside.
- Don’t base your investment strategy around seasonality: Even with the strong seasonal pattern, basing your investment strategy around the months of the year amounts to timing the market. As the oft-quoted investment disclaimer says, “Past performance is no guarantee of future performance,” even when the long-term pattern seems strong.
- Recalibrate your risk: If you’ve been heavily invested in tech and artificial intelligence stocks the past few years, congratulations! You’re likely sitting on large gains. Just understand that the higher the valuations go in this sector — and most will agree they are stretched — the riskier these investments become. There’s nothing wrong with lightening your extended, high-risk positions and taking some profits.
- Pay attention: While you should always keep an eye on factors that can affect your investments, such as earnings reports, government policies and inflation readings, now is the time to be particularly aware of what’s happening, as one piece of bad news could trigger a big market reaction.
There are solid arguments both for and against the market making new highs for the rest of the year. That’s actually what makes a healthy market. Bulls have a lot going for them, with seasonality in their favor, companies posting solid earnings and monetary policy easing. Bears will point out that nothing lasts forever and the event that triggers a bear market is always a surprise.
As always, the best course for investors is to review their portfolios and make sure they remain in line with their financial objectives and risk tolerance.
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