Retail investors return with funds after tax season, is the "April market" in U.S. stocks about to kick off?

Zhitong Finance APP learned that bullish players believe the choppy trend in the U.S. stock market is close to coming to an end, and seasonal patterns also provide support for it. Data compiled by Bloomberg shows that April has traditionally been a month when U.S. stocks perform strongly—since 1990, the S&P 500 Index has averaged a gain of 1.5% in that month, second only to November (2.2%). Some market views suggest that this seasonal strength is related to retail investors’ behavior: after the mid-month income tax filing deadline, they often put money back into the stock market.

Dave Lutz, a stock sales trader and macro strategist at Jonestrading Institutional Services LLC, said: “A lot of the dynamics are tied to retail investors’ liquidity needs ahead of the tax filing deadline. Everyone may be waiting in the wings, keeping their cash until taxes are filed. Based on historical experience, once taxes are filed, people receive their tax refunds and reinvest.”

According to data from Barclays Bank since 2006, from April 15 (the U.S. tax filing deadline) to the end of the month, the S&P 500 Index has averaged a gain of 0.83%. And according to data from the Internal Revenue Service, this year the tax refund checks consumers receive have increased by 10% compared with the same period in 2025.

This could provide some help for the market. Earlier, a series of geopolitical and policy concerns led to a pullback in the shares of tech giants, and the S&P 500 Index also fell more than 5% from its peak. On Monday, the S&P 500 Index rose 0.4%, and the Nasdaq 100 Index rose 0.6%.

Judging from historical data, April is the second-best month for the S&P 500 Index to perform

Based on data from The Stock Trader’s Almanac since 1994, in the second half of April the Nasdaq Composite Index and the small-cap Russell 2000 Index typically show strong upward momentum. However, Christopher Mistal, head of research at the firm, cautioned: attributing this phenomenon entirely to the impact of tax season may be too early, because investors are likely adjusting their positions at the same time for the upcoming earnings season.

Mistal said: “Even so, the combined effects of various events, and the impact of Easter this year, indeed shift much of April’s upward momentum to the second half.”

Investors who restart buying stocks in April are not limited to retail investors. Goldman Sachs Group’s trading unit said that as systematic investors (including commodity trading advisers and volatility target strategy investors) finish their selling, they may put about $20 billion into the U.S. stock market.

This month’s historic strength may offer a bit of comfort to investors seeking a floor and rebound after the selling wave. Previously, due to the Iran war triggering the biggest oil price surge in history, the S&P 500 Index at one point fell 9% from its January peak. Although the rebound has started to show early signs, the market is still in a war vortex that is difficult to predict.

Most of the rebound momentum is expected to show up in the second half of this month. According to data from Vanda Research since 2013, the first half of April is often one of the weakest periods for retail buying activity, while the last two weeks’ buying activity tends to rise slightly and continue through the end of the month and the end of the quarter.

Viraj Patel, Global Macro Strategist at Vanda Research, said: “Since the Iran conflict broke out, most investors have already cut their risk exposure significantly, so the threshold for further selling in the coming weeks seems high.”

He added: “Once the effect of retail investors’ tax filing date fades, starting in the second half of April, positioning for a potential rebound in the stock market begins to show its appeal. In addition, if the situation in the Iran conflict can ease or end, it will also help attract investors back to the market.”