Retail Investors Return to U.S. Stock Market with Strongest Rally Since 2020, S&P 500 Breaks 7,000

Gate News message, April 17 — Retail investors have returned to the U.S. stock market with their strongest rally since November 2020, pushing major indices to record highs despite ongoing geopolitical tensions in the Middle East. The S&P 500 broke through the 7,000-point milestone on Wednesday, marking its first all-time high since late January, and has surged 11% since March 30.

According to Goldman Sachs’ basket of retail-favored stocks, which tracks the most popular holdings among individual investors, the index has climbed 22% since late March. Roundhill Investments CEO Dave Mazza commented, “Animal spirits have not only returned, but they have returned with much greater ferocity.” Quantum computing stocks have led the rally, with IonQ Inc., D-Wave Quantum Inc., and Rigetti Computing Inc. each posting gains exceeding 40% this month. The Roundhill Meme Stock ETF (MEME), which trades under that ticker, has surged 51% since March 31.

Market sentiment shifted as the United States and Iran considered extending a ceasefire agreement by two weeks. Despite significant damage to Persian Gulf energy infrastructure and the effective closure of the Strait of Hormuz, major global stock exchanges have largely erased losses since the conflict began. Tech giants have regained control of market direction, with one company known for athletic footwear surging 582% in a single day following announcements related to artificial intelligence (AI) initiatives.

However, underlying economic risks persist. Oil prices remain elevated above $90 per barrel, pressuring inflation expectations and monetary policy outlook, particularly after consumer price index (CPI) data—which measures changes in prices paid by consumers—recorded its largest monthly increase since 2022. Miller Tabak + Co. Chief Market Strategist Matt Maley warned, “Middle East issues and risks in areas like private credit markets have not disappeared, so current market dynamics are indeed concerning.”

Barclays’ Chief of Global Equity Tactical Strategy Alexander Altmann noted that retail fund flows have rebounded sharply since early April and have been supporting daily capital movements since April 8. Looking ahead, retail buying is expected to accelerate after the April 15 tax filing deadline, as investors anticipate higher refunds under the Trump administration’s tax policies. Altmann stated in a Thursday client report, “You can call it a return of animal spirits—or, given the Iran conflict backdrop, perhaps you can choose not to. Either way, retail fund flows are undeniably an important component of broader U.S. equity dynamics.”