Can the Stock Market Find Solace in Good Friday? A Conservative Analysis

The day before Good Friday has often been a beacon of hope for stock market investors. Historically, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite have seen gains in the trading day leading up to this Christian holiday. But in the chaotic financial landscape of 2025, where President Donald Trump’s tariff plans loom large over market sentiment, can we still expect a return on this seasonal trend?

A Holiday Tradition of Gains

Market closures for Good Friday, a holiday observed on the Christian calendar, bring about an interesting phenomenon where many traders look to boost their portfolios in the days leading up to the break. Historically speaking, since 1980, the S&P 500 averages a gain of 0.38% on the day before Good Friday, while the Dow Jones and Nasdaq show average increases of 0.3% and 0.46%, respectively, according to data from AlmanacTrader.

However, it is essential for prudent investors to approach these statistics with caution. The index performances in the past offer no guarantee of future results, especially with the volatility that has clouded market performance in recent weeks. Wednesday’s trading session saw all three major indexes tumbling: the S&P closed down 2.24%, the Dow by 1.73%, and Nasdaq by 3.07%. The recent turmoil hangs over the market like a dark cloud, making past performance an unreliable predictor this year.

Market Dynamics Leading Into the Holiday

As noted by Eric Schiffer, chair of the Patriarch Organization, “Past performance is no promise in a tariff world.” With constant announcements from the Trump administration regarding tariffs adding to market unpredictability, the optimism surrounding Good Friday looks tenuous at best. Nevertheless, analysts suggest that two main factors generally contribute to pre-holiday gains. Traders may look to purchase stocks to cover their short positions ahead of a long weekend, driven by the palpable apprehension that market-moving news could arise during the break.

Dave Weisberger, a seasoned strategist, pointed out this pressure that exists before extended breaks. While it’s possible for traders to sell off positions to cover long positions, the borrowing costs related to short selling usually predispose them to buy instead.

Retail Investor Considerations

Furthermore, this year presents a unique opportunity for retail investors as many respondents expect tax refunds to enhance liquidity in the market. Christopher Grisanti, chief market strategist at MAI Capital Management, notes, “There may be some extra liquidity there.” This influx of tax refunds could temporarily buoy retail trader sentiments, spurring buying activity that contributes to an upward shift in stock prices.

Then we have the invigorating air of spring, which typically brings an optimistic outlook. As Chris Barnes of Escalent emphasizes, “Seasonality is a real human phenomenon.” This combined potential for spring-induced optimism and a temporary influx of cash might just create a backdrop for a positive pre-Good Friday performance. However, one must not ignore the external uncertainties fueled by tariff negotiations, which remain a damper on overall market confidence.

Historical Patterns Beyond Good Friday

While one might fasten their hopes on a profitable Thursday, a cautious investor should also look to historical trends following the holiday weekend. Past data reveals that the Monday following Good Friday has not been kind to investors on average. The S&P 500 has typically declined by an average of 0.18%, along with the Dow down by 0.13% and Nasdaq by 0.25%.

These numbers showcase the potential pitfalls that can accompany a short-lived holiday rally. Investors ought to be aware that picking a winning period can be just as precarious as it sounds.

Taking a Breather

Amidst the current environment fraught with volatility and unpredictability, the upcoming market closure for Good Friday may be a welcome reprieve for investors and traders alike. As Grisanti aptly puts it, “I don’t know anyone in our business who isn’t dying for a breather.”

In conclusion, while historical trends may play a role in shaping expectations for Good Friday’s pre-market performance, the uncertainty instigated by ongoing tariff discussions casts a long shadow. Investors should proceed with caution, keeping a keen eye on both the potential for gains leading into the holiday and the historical patterns that suggest a rocky Monday may follow. It’s this balance of cautious optimism and steadfast vigilance that will serve investors best in these unpredictable times.