There is nothing worse than being the outsider at a party. Retail investors, who pushed the S&P 500 to records in 2025 by buying the dips, were largely sidelined during April's broad-index rally. Vanda Research shows that retail bought just $196m of equities in a single day — only about 15% of the crowd's average daily activity over the past year — the lowest volumes since November 2023.

Retail flows into US equities

The driver of the six-day S&P 500 rally — the longest since last autumn — was the so-called smart money, i.e., institutional investors. They embraced the TACO tactic (Trump Always Chickens Out) and sat on pins and needles after the president's threat to "erase a whole civilization." Professionals anticipated that the maximal threat would be followed by retreat — which is exactly what happened, returning the broad index to its highest levels in a month.

The problem is there are no guarantees the S&P 500 rally will continue. Markets often fire first and sort things out later. The index's jump largely reflects smart money following the TACO script, but key questions remain unresolved. The Strait of Hormuz is still closed — fewer than a dozen tankers transit it now versus 135 before the war. Oil remains elevated and will likely stay so. Even an increase in traffic through the world's key artery would add only 2–3 million b/d to markets over a month — a long process.

S&P 500 performance

As a result, stagflation in the United States could become a reality, an extremely unfavorable backdrop for equities. After core personal consumption expenditures rose by 0.4% in February, Bloomberg economists expect headline CPI to accelerate by 0.9% m/m in March, marking the fastest monthly gain since 2022. Add a GDP revision for Q1 from 0.7% to 0.5% and you have slowing growth alongside rising inflation — the very stagflationary scenario that should concern the S&P 500.

Undoubtedly, US President Donald Trump continues to prop up the index with optimistic comments about talks with Iran and calls for Israel to halt strikes on Lebanon, tossing equities a lifeline. For investors, however, the outcome of the dialogue is far more important than the rhetoric.

Technically, the daily chart shows that the S&P 500 is in the process of restoring the uptrend. Bulls have approached a key pivot resistance at 6,850 within arm's reach. A successful break above that level would justify adding to previously established long positions in the broad index. Targets remain 6,890 and 6,950.