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Stocks jump in first trading day of May

William Cummings
USA TODAY

Stocks closed higher Monday as Wall Street shook off last week's sharp decline and as Japanese stocks continue to struggle on dashed hopes for more stimulus moves.

The Dow Jones industrial average closed higher by 117.52 points, or 0.7%, to 17,891, after falling 230 points last week. The Standard & Poor's 500 index gained 0.8% to 2081.

The Nasdaq composite index gained 0.9% to 4818 and broke a 7-day losing streak.

Traders work on the floor of the New York Stock Exchange.

Oil prices fell as U.S. benchmark crude dropped 2.3% to $44.86 a barrel

Today's gains come on the first trading day of May which kicks off what is traditionally known as the worst-six month period for stocks. The adage "Sell in May and go away" is a strategy that advises investors to avoid stocks until October.

Since 1929 the broad Standard & Poor’s 500 stock index has posted average returns of 5.04% in the November to April period , vs. a 1.87% gain from May to October, according to Bespoke Investment Group.

But selling all your stocks is a strategy many invvestment advisers don't recommend.

“While May to October has averaged minimal gains, they’re still gains,” Paul Hickey, co-founder of Bespoke told clients in a report. Even the average 1.87% gain going back 100 years for the worst six-month period for stocks, or the 0.85% return the last 20 years, is superior to the current average yield of 0.11% on money market funds, according to BankRate.com.

Hickey’s advice: “Hold in May and go away.”

Overseas, Japan’s Nikkei 225 lost 518.67 points, or 3.1%, to close at 16,147.38 as the Bank of Japan frustrated investors last week when it announced it planned no action to address the country’s lackluster growth.

“While lingering disappointment from the Bank of Japan’s inaction continues to weigh on Japanese markets, negative sentiment started filtering through to other global markets and this ripple effect should be closely monitored,” said Stephen Innes, a senior foreign exchange trader at OANDA.

Most other Asian markets were shut for holidays

European markets were higher as Germany's DAX index was up 0.8% and France's CAC 40 gained 0.3%.

Contributing: USA TODAY's Adam Shell

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