"April is a gentle reminder that life's transformations are beautiful and inevitable." – Ellen Lovell
Seasonal patterns can often create powerful turning points.
The early part of this year has felt like one of those moments. After a strong finish to 2025, the market began the year with a classic risk-off rotation: capital flowed out of high-growth technology names and into energy, along with more defensive sectors such as consumer staples and utilities.
But there’s reason to believe the pause is temporary. A spring rally appears increasingly likely, with technology poised to retake the lead once again.
Historical Precedent Points to Bullish View
The recent escalation in the Iran conflict—marked by U.S. and Israeli strikes, disruptions in the Strait of Hormuz, and oil price spikes—has understandably unsettled investors. But analyses of major post-World War II conflicts reveal that the S&P 500 has, on average, returned to pre-event levels within about 28 days, as well as posted positive gains one year later in most cases. Geopolitical shocks tend to cause sharp but short-lived pullbacks, especially when the underlying economy remains resilient.
In the current episode, the market’s composure reflects several stabilizing factors: diversified global supply chains have limited oil disruption impacts, central banks have signaled policy flexibility, and corporate earnings have shown surprising durability. This resilience reminds us that investors often price in worst-case scenarios early, only to recalibrate as reality proves less dire.
And don’t forget – the S&P 500 has been in 11 bull markets (not including the current one) since 1949. The blue-chip index hit a new high in January of 2024 following the inflation-induced bear market of 2022.
Dating back to the 1950s, once those former highs were put in the rearview mirror, bull markets have lasted an average of another 4.5 years. This overlooked fact suggests the potential for more gains ahead that could be substantial. Investors normally underestimate the length and magnitude of bull markets.
Still, the doubters and naysayers remain prevalent, something that we think can help push prices higher well into the future. There are always reasons that critics can point to as to why stocks can’t continue higher, but as we know, stocks climb a wall of worry.
Positive Seasonality Sets the Stage for Upside
There’s no getting around it – the month of March was pretty brutal. Normally a strong month for stocks, the S&P 500 fell by more than 5%. But there is light at the end of the tunnel.
Over the past 30 years, there have only been 6 other instances in which March dropped by more than 3%. In 5 out of the 6 cases, the S&P 500 rebounded in April, averaging a very respectable 4.59% gain. And following those sharp March declines, the full-year return for the index averaged an impressive 10.25%.
These patterns reinforce what we’ve seen during multiple years under the Trump administration (think 2020 and 2025): early weakness followed by a recovery phase, fueled by improving sentiment around earnings guidance and the stabilization of economic data.
Continued . . .
------------------------------------------------------------------------------------------------------
Care to See All Zacks Buys & Sells for $1?
Starting today, for one month, you are invited to see the real-time buys and sells from all our private portfolios for only $1. And you won't be obligated to spend another cent.
These portfolios have already closed 77 double and triple-digit gains this year. While not all our picks are winners, members saw recent gains of +499.3%, +627.5%, and even +2,027.7%.¹
Special opportunity ends at midnight Sunday, April 12.
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------------------------------------------------------------------------------------------------------
Positive seasonality is setting the stage for not only a rebound in April, but beyond as well. The old “Sell in May and Go Away” adage hasn’t held much significance in recent years. In fact, the S&P 500 has advanced during the month of May in 9 out of the past 10 years:
Image Source: Zacks Investment Research
In our experience, these patterns are not bulletproof, but they reflect a natural rhythm: tax refunds begin flowing, corporate guidance improves, and investor sentiment often brightens after the winter doldrums.
This year’s setup aligns particularly well with that historical template. Early 2026 tax refunds are running significantly higher than last year—averaging around 10-11% larger in the initial waves—putting meaningful extra cash into consumer pockets at a time when many households have been cautious. This liquidity tends to find its way into discretionary spending, retail, and technology purchases, often accelerating in April and May.
Q1 Earnings Evolution Supports Rally
Earnings provide another supportive pillar. Estimates for the latest period (Q1 2026) have shown a favorable trend despite the conflict in the Middle East. Estimates are actually up for half of the 16 Zacks sectors since the start of March, including the technology sector.
The technology sector has been a key pillar of aggregate earnings growth throughout this bull market, and that strength is expected to have continued in the first quarter. Tech remains the primary driver, fueled by AI adoption across enterprises, productivity gains, and ballooning data-center investment. The tech sector is expected to produce 27.1% earnings growth on 22.5% higher revenues:
Earnings growth for the S&P 500 is tracking around 12.8% year-over-year in Q1, with the tech sector expected to contribute the lion’s share. Full-year 2026 S&P 500 earnings growth estimates sit above 14%, and analysts have been modestly revising these figures higher in recent weeks.
The market’s early-year caution around AI spending has created an attractive entry point; once Q1 results confirm that demand remains robust, the narrative should shift back toward growth.
Beyond these core drivers, several additional factors are worth noting. Corporate balance sheets are healthy, and many companies have already begun guiding for solid 2026 results. In the background, artificial intelligence is transitioning from hype to tangible productivity gains, a shift that historically rewards patient investors in the leading technology names.
And a gradual improvement in borrowing costs supports housing activity, consumer confidence, and corporate capital spending—areas that ultimately benefit technology through higher IT budgets and device upgrades.
The Big Picture
While it’s never easy dealing with uncertainty, the data we analyzed tells us to keep an open mind about bullish outcomes ahead.
The combination of strong seasonal patterns and accelerating earnings visibility creates a constructive setup. The early-year period of rotation will likely serve as a healthy breather that allows the strongest secular themes—such as AI infrastructure and digital transformation—to reassert themselves with renewed momentum.
Markets rarely move in straight lines, but the fundamental and seasonal ingredients for a spring rally appear to be aligning.
The Best Way to Take Advantage of This Market
Today, I'm pleased to offer you full, 30-day, real-time access to every stock and ETF we recommend as part of our celebrated Zacks Ultimate arrangement.
Our expert-led recommendation services are designed to highlight the most promising stocks on the market, including the hottest energy stocks, breakthrough AI firms, big dividend payers, stocks under $10, and much more.
The total cost is only $1, and there's no obligation to spend a cent more.
This includes the real-time buy and sell recommendations, along with expert market insights from ALL of Zacks' private portfolio services.
While future success isn't guaranteed, Zacks Ultimate members recently had opportunities to close gains of +499.3%, +627.5%, and even +2,027.7%.¹
Free Bonus Report: You'll also receive our Ultimate Four Special Report which highlights our best 4 stocks to buy in Q4. These 4 stocks are judged by our experts to have the greatest upside this quarter and beyond — and we believe now is the perfect time to get in.
Don't wait. This opportunity ends at midnight, Sunday, April 12.
Gain Zacks Ultimate Access and Our Bonus Ultimate Four Special Report Right Now for Just $1 >>
Wishing You the Best on Your Investing Journey,
Bryan
Bryan Hayes, CFA manages the Zacks Income Investor and Headline Trader services and has deep experience in both long-term and short-term investing. He invites you to take advantage of our unique $1 opportunity.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.
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Overlooked Pattern Sets the Stage for a Breathtaking Rally
"April is a gentle reminder that life's transformations are beautiful and inevitable." – Ellen Lovell
Seasonal patterns can often create powerful turning points.
The early part of this year has felt like one of those moments. After a strong finish to 2025, the market began the year with a classic risk-off rotation: capital flowed out of high-growth technology names and into energy, along with more defensive sectors such as consumer staples and utilities.
But there’s reason to believe the pause is temporary. A spring rally appears increasingly likely, with technology poised to retake the lead once again.
Historical Precedent Points to Bullish View
The recent escalation in the Iran conflict—marked by U.S. and Israeli strikes, disruptions in the Strait of Hormuz, and oil price spikes—has understandably unsettled investors. But analyses of major post-World War II conflicts reveal that the S&P 500 has, on average, returned to pre-event levels within about 28 days, as well as posted positive gains one year later in most cases. Geopolitical shocks tend to cause sharp but short-lived pullbacks, especially when the underlying economy remains resilient.
In the current episode, the market’s composure reflects several stabilizing factors: diversified global supply chains have limited oil disruption impacts, central banks have signaled policy flexibility, and corporate earnings have shown surprising durability. This resilience reminds us that investors often price in worst-case scenarios early, only to recalibrate as reality proves less dire.
And don’t forget – the S&P 500 has been in 11 bull markets (not including the current one) since 1949. The blue-chip index hit a new high in January of 2024 following the inflation-induced bear market of 2022.
Dating back to the 1950s, once those former highs were put in the rearview mirror, bull markets have lasted an average of another 4.5 years. This overlooked fact suggests the potential for more gains ahead that could be substantial. Investors normally underestimate the length and magnitude of bull markets.
Still, the doubters and naysayers remain prevalent, something that we think can help push prices higher well into the future. There are always reasons that critics can point to as to why stocks can’t continue higher, but as we know, stocks climb a wall of worry.
Positive Seasonality Sets the Stage for Upside
There’s no getting around it – the month of March was pretty brutal. Normally a strong month for stocks, the S&P 500 fell by more than 5%. But there is light at the end of the tunnel.
Over the past 30 years, there have only been 6 other instances in which March dropped by more than 3%. In 5 out of the 6 cases, the S&P 500 rebounded in April, averaging a very respectable 4.59% gain. And following those sharp March declines, the full-year return for the index averaged an impressive 10.25%.
These patterns reinforce what we’ve seen during multiple years under the Trump administration (think 2020 and 2025): early weakness followed by a recovery phase, fueled by improving sentiment around earnings guidance and the stabilization of economic data.
Continued . . .
------------------------------------------------------------------------------------------------------
Care to See All Zacks Buys & Sells for $1?
Starting today, for one month, you are invited to see the real-time buys and sells from all our private portfolios for only $1. And you won't be obligated to spend another cent.
These portfolios have already closed 77 double and triple-digit gains this year. While not all our picks are winners, members saw recent gains of +499.3%, +627.5%, and even +2,027.7%.¹
Special opportunity ends at midnight Sunday, April 12.
Start Zacks Ultimate Access Now >>
------------------------------------------------------------------------------------------------------
Positive seasonality is setting the stage for not only a rebound in April, but beyond as well. The old “Sell in May and Go Away” adage hasn’t held much significance in recent years. In fact, the S&P 500 has advanced during the month of May in 9 out of the past 10 years:
Image Source: Zacks Investment Research
In our experience, these patterns are not bulletproof, but they reflect a natural rhythm: tax refunds begin flowing, corporate guidance improves, and investor sentiment often brightens after the winter doldrums.
This year’s setup aligns particularly well with that historical template. Early 2026 tax refunds are running significantly higher than last year—averaging around 10-11% larger in the initial waves—putting meaningful extra cash into consumer pockets at a time when many households have been cautious. This liquidity tends to find its way into discretionary spending, retail, and technology purchases, often accelerating in April and May.
Q1 Earnings Evolution Supports Rally
Earnings provide another supportive pillar. Estimates for the latest period (Q1 2026) have shown a favorable trend despite the conflict in the Middle East. Estimates are actually up for half of the 16 Zacks sectors since the start of March, including the technology sector.
The technology sector has been a key pillar of aggregate earnings growth throughout this bull market, and that strength is expected to have continued in the first quarter. Tech remains the primary driver, fueled by AI adoption across enterprises, productivity gains, and ballooning data-center investment. The tech sector is expected to produce 27.1% earnings growth on 22.5% higher revenues:
Earnings growth for the S&P 500 is tracking around 12.8% year-over-year in Q1, with the tech sector expected to contribute the lion’s share. Full-year 2026 S&P 500 earnings growth estimates sit above 14%, and analysts have been modestly revising these figures higher in recent weeks.
The market’s early-year caution around AI spending has created an attractive entry point; once Q1 results confirm that demand remains robust, the narrative should shift back toward growth.
Beyond these core drivers, several additional factors are worth noting. Corporate balance sheets are healthy, and many companies have already begun guiding for solid 2026 results. In the background, artificial intelligence is transitioning from hype to tangible productivity gains, a shift that historically rewards patient investors in the leading technology names.
And a gradual improvement in borrowing costs supports housing activity, consumer confidence, and corporate capital spending—areas that ultimately benefit technology through higher IT budgets and device upgrades.
The Big Picture
While it’s never easy dealing with uncertainty, the data we analyzed tells us to keep an open mind about bullish outcomes ahead.
The combination of strong seasonal patterns and accelerating earnings visibility creates a constructive setup. The early-year period of rotation will likely serve as a healthy breather that allows the strongest secular themes—such as AI infrastructure and digital transformation—to reassert themselves with renewed momentum.
Markets rarely move in straight lines, but the fundamental and seasonal ingredients for a spring rally appear to be aligning.
The Best Way to Take Advantage of This Market
Today, I'm pleased to offer you full, 30-day, real-time access to every stock and ETF we recommend as part of our celebrated Zacks Ultimate arrangement.
Our expert-led recommendation services are designed to highlight the most promising stocks on the market, including the hottest energy stocks, breakthrough AI firms, big dividend payers, stocks under $10, and much more.
The total cost is only $1, and there's no obligation to spend a cent more.
This includes the real-time buy and sell recommendations, along with expert market insights from ALL of Zacks' private portfolio services.
While future success isn't guaranteed, Zacks Ultimate members recently had opportunities to close gains of +499.3%, +627.5%, and even +2,027.7%.¹
Free Bonus Report: You'll also receive our Ultimate Four Special Report which highlights our best 4 stocks to buy in Q4. These 4 stocks are judged by our experts to have the greatest upside this quarter and beyond — and we believe now is the perfect time to get in.
Don't wait. This opportunity ends at midnight, Sunday, April 12.
Gain Zacks Ultimate Access and Our Bonus Ultimate Four Special Report Right Now for Just $1 >>
Wishing You the Best on Your Investing Journey,
Bryan
Bryan Hayes, CFA manages the Zacks Income Investor and Headline Trader services and has deep experience in both long-term and short-term investing. He invites you to take advantage of our unique $1 opportunity.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.