April is traditionally one of the most bullish months of the year, because April 15 is Tax Day. Last year, the Trump administration passed the “Big Beautiful Bill,” which increased the standard deduction for most taxpayers in 2025, as well as reduced taxation on overtime and tips. April is also the month when you can make your IRA contribution for 2025. As a result, there is generally a significant influx of money into the stock market during April.
Additionally, markets were at a 10% discount at the start of the month due to the war in Iran, which is typically considered correction-level territory.
Earnings Season and Envy Buys
This period also marked the start of earnings season along with a key news catalyst: the Trump administration initiated a two-week ceasefire at the beginning of the month. Even though the war in Iran is not over, markets are forward-looking, and expectations for peace in the Middle East are high. There have been fewer drone strikes and fewer tanker attacks. So even though the war continued, the market had the setup for a strong rally.
In technical analysis, this is sometimes referred to as an “envy buy“, which is visible in the chart above. When markets trend upward for a long period, many investors wait on the sidelines for a pullback. In this case, the pullback coincided with incentives for investors to deploy capital into the stock market.
That said, there are several negative long-term factors suggesting the potential for continued volatility and sideways movement. These include: elevated oil prices, ongoing inflation concerns (likely tied to high energy costs), and continued layoffs as the economy integrates artificial intelligence, reducing parts of the workforce. There is also lingering uncertainty surrounding the war in Iran, which is not officially over and could continue for some time.
Overall, earnings reports have been generally positive or in line with expectations, with nothing particularly surprising so far this earnings season.
Despite these concerns, the stock market remains at all-time highs, and the economy continues to show resilience, even amid ongoing geopolitical uncertainty. But after a sharp move to the upside it is always best to take some profit off the table, and resume a cautious stance until we get more economic clarity from the broader economy.
Written by Michael DiGioia, Director of Education
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