Market Recap: April 2025

Market commentary

• The extent of the tariffs announced in early April exceeded market expectations, resulting in a volatile month.
• With imports surging ahead of upcoming tariffs and an unexpected decrease in government spending, GDP declined by 0.3% in the first quarter, marking its first drop since the pandemic.
• Despite the GDP decline, employment, industrial production, and other indicators show no signs that domestic production decreased in the first quarter.
• Both Consumer Sentiment and Consumer Confidence declined in April, falling for the 4th and 5th straight months, respectively.

Select economic and market data

Equities

• Most major U.S. stock indices ended lower for the third straight month. However, these losses did not capture the most volatile month in five years, during which the S&P 500 was down nearly 14% at one point from its March 31 close.
• International equities again outperformed domestic stocks, posting positive returns for both the month and year-to-date.

Fixed income

• After the tariff announcement, the 10-year U.S. Treasury yield dipped below 4%, then surged to nearly 4.6% a week later, before eventually settling at slightly lower levels.

Strategic outlook

• Some caution warranted on equities in the near-term, particularly in large-cap stocks with above-average valuations; currently favoring small-cap and mid-cap domestic stocks longer-term.
• Near-average expected returns projected for fixed income with the Fed on pause and rates reflective of conditions.
• Above-average volatility is likely given central bank involvement and geopolitical uncertainty.