To The Moon

Bullish investors believe the recent volatility in US stocks may be nearing its end, with seasonal patterns providing additional support. Data compiled by Bloomberg indicates that April has historically been a strong month for US equities. Since 1990, the S&P 500 has averaged a gain of 1.5% in April, a performance second only to November's average gain of 2.2%. Some market observers link this seasonal strength to retail investor behavior, suggesting individuals often reinvest funds into the stock market after the mid-month tax filing deadline. Dave Lutz, Equity Sales Trader and Macro Strategist at Jonestrading Institutional Services LLC, noted, "Much of the dynamic relates to liquidity needs for retail investors ahead of Tax Day. Many are likely waiting on the sidelines, holding cash until their taxes are settled. Historically, after filing, people receive refunds and reinvest." According to Barclays data dating back to 2006, the S&P 500 has averaged a 0.83% increase from April 15th, the US tax deadline, through the month's end. Supporting this potential inflow, IRS data shows consumer tax refund checks this year are up 10% compared to the same period in 2025. This could provide a tailwind for the market, which recently saw a pullback in tech giants and a more than 5% decline in the S&P 500 from its peak due to geopolitical and policy concerns. On Monday, the S&P 500 rose 0.4%, while the Nasdaq 100 Index gained 0.6%. Historical data further solidifies April's reputation. According to the Stock Trader's Almanac data since 1994, the latter half of April often sees stronger upward momentum for the Nasdaq Composite Index and the small-cap Russell 2000 Index. However, Christopher Mistal, the publication's Research Director, cautions against attributing this pattern solely to the tax season, as investors may also be positioning for the upcoming earnings season. Mistal stated, "Nevertheless, the confluence of events, including the timing of Easter like this year, does tend to push much of April's positive momentum into the second half of the month." The potential buyers re-entering the market in April are not limited to retail investors. Goldman Sachs Group Inc.'s trading desk suggests that systematic investors, including commodity trading advisors and volatility target strategies, could deploy approximately $20 billion into US stocks as their recent selling abates. This historical strength in April may offer some solace to investors seeking a rebound after the recent sell-off. The S&P 500 had previously declined about 9% from its January high, partly driven by a significant oil price surge following the Iran conflict. While a rebound appears to be starting, the market remains influenced by an unpredictable war. Most of the rebound is anticipated to materialize in the second half of the month. Data from Vanda Research since 2013 indicates the first half of April is typically one of the weakest periods for retail buying activity, while the final two weeks often see a modest pickup that continues through month-end and quarter-end. Viraj Patel, Global Macro Strategist at Vanda Research, said, "Since the Iran conflict began, most investors have significantly reduced their risk exposure, so the bar for further selling in the coming weeks appears high." He added, "Once the impact of the retail tax deadline fades, positioning for a potential stock market rebound starting in the second half of April looks attractive. Furthermore, any de-escalation or resolution of the Iran conflict would also help draw investors back into the market."