Given the volatility of recent weeks, it’s especially hard to predict what may happen leading up to Good Friday this year, say market experts.

Photo: MarketWatch photo illustration/iStockphoto

By Charles Passy

In this ever-tumultuous year, will the Good Friday pause be good for investors?

That’s the question some might be asking ahead of the Christian holiday. The two major stock markets — the New York Stock Exchange and the Nasdaq — will be closed on Friday. The same goes for bond markets, which will close early on Thursday, known as Maundy Thursday, or Holy Thursday on the Christian calendar, at 2 p.m. Eastern.

Historically, the day before Good Friday is a positive one for investors, with the S&P 500 SPX gaining 0.38% on average since 1980, the Dow Jones Industrial Average DJIA  rising 0.3% and the Nasdaq Composite COMP advancing 0.46%, according to data from StockTradersAlmanac.com and @AlmanacTrader. That compares to an average daily gain of 0.04% for the S&P 500 and the Dow and a 0.05% gain for the Nasdaq over the same historical period.

READ MORE:: Why U.S. investors might be seriously underestimating the risk of a recession

But market analysts are hesitant to read too much into that data this year, given the volatility seen in recent weeks related to President Donald Trump’s tariff plans and the near-daily announcements from the president or members of his administration.

“Past performance is no promise in a tariff world,” said Eric Schiffer, an investor and the chair of the Patriarch Organization, a Los Angeles-based venture-capital firm.

Certainly, the markets didn’t fare well on Wednesday. All three major indexes were down — the S&P by 2.24%, the Dow by 1.73% and the Nasdaq by 3.07%. And history was no guide in this case, since records since 1980 show those same indexes have all been positive on average two days before Good Friday.

In general, a number of factors can cause the market to rise heading into Good Friday, analysts say. For starters, pre-holiday periods are often positive because professional traders may decide to buy stocks to cover their short positions over the extended break from trading — just in case any market-moving news occurs during that time.

READ MORE:: Alibaba’s stock is falling, and a development at Nvidia could be the reason

“More can happen geopolitically over a three-day weekend” versus a two-day one, said Dave Weisberger, a veteran market strategist who works as a consultant in the financial space.

Weisberger acknowledges the reverse could hold true — that traders could sell before a holiday break to cover their long positions, which would drive prices down. But he added there’s generally more pressure to cover short positions because of the inherent borrowing costs.

On top of that, Good Friday can spur buying for reasons all its own. One of the key ones, at least as it applies to individual investors, is this is a time of year when many could be anticipating tax refunds or even seeing that money already hit their bank accounts.

“There may be some extra liquidity there,” said Christopher Grisanti, chief market strategist at Cleveland-based MAI Capital Management.

Others noted that spring itself is usually a period of optimism — and that can naturally extend to markets.

“Seasonality is a real human phenomenon,” said Chris Barnes, president of Escalent, a data-analytics firm.

But again, experts note that the current tariff-driven market situation has too much uncertainty baked into it to say anything with much, well, certainty. And while one might argue that the holiday period couldn’t be better timed in terms of giving investors a pause that could help markets recover — think of it like a full-day circuit breaker — that still may not be the case here because of the ever-changing tariff news.

Or as Barnes put it: “Does this breather come with a Thursday-night news dump?”

Even if markets do rise this Thursday and for the Good Friday week overall, investors may nevertheless want to take note of another historical trend: The Monday after the holiday weekend that encompasses Good Friday and Easter Sunday has historically been a negative one. The S&P 500 has been down 0.18% on average since 1980, the Dow off by 0.13% and the Nasdaq down by 0.25%, according to data from StockTradersAlmanac.com and @AlmanacTrader.

Either way, Grisanti of MAI Capital Management observed that the upcoming market holiday is especially welcome, considering all the volatility of the past few weeks.

“I don’t know anyone in our business who isn’t dying for a breather,” he said.

Source: Marketwatch