As U.S. equities attempt to stabilize following a period of heightened volatility, seasonal buying factors for April are re-entering market discussions. Historical data reveals that since 1990, the S&P 500 has averaged a gain of 1.5% in April, making it the second strongest performing month of the year. Recent price action suggests a tentative recovery may be forming, with the S&P 500 rising 0.4% and the Nasdaq 100 advancing 0.6%. This comes after the index had declined more than 5% from its peak and was down as much as 9% intraday from its January record high, pressured by a surge in oil prices and dampened risk sentiment stemming from geopolitical tensions related to the Iran conflict.
This potential trend appears closely linked to the dynamics of retail fund flows around the U.S. tax filing deadline. Investors often hold onto capital until after tax day, reallocating assets once filings are complete and tax refunds begin returning to accounts. Data from Barclays shows that since 2006, the S&P 500 has averaged a gain of 0.83% between April 15 and the month's end. The Internal Revenue Service reported that this year's average refund amount is 10% higher than the same period in 2025. This timing effect, combined with position adjustments ahead of earnings season, may help explain why buying activity tends to concentrate in the second half of April, even if tax-related flows are not the sole driver.
Fund flows from systematic strategies could provide another layer of support. Goldman Sachs' trading desk estimates that Commodity Trading Advisors and volatility-targeting strategies could deploy approximately $20 billion into U.S. stocks as prior selling pressure subsides. Meanwhile, data from Vanda Research indicates that retail participation, after a weak start to the month, typically strengthens during the final weeks. Given that many investors have already reduced their exposure following recent geopolitical shocks, the threshold for further significant selling may be relatively high. This leaves room for a potential rebound to extend into late April, especially if tensions surrounding Iran begin to ease.
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