April Market Update

April Recap

The S&P 500 fell -0.7% in April, while International stocks outperformed US stocks for the fourth consecutive month.(1) However, the month was far more volatile than the numbers above make it seem – the S&P 500 swung nearly 15% from peak to trough, including a historic 9.5% gain in one day after President Trump announced a 90-day pause on the reciprocal tariffs he had announced the prior week (which had driven the index  >10% lower in just two days).(2)

Yields fell and rose in tandem with stocks, with the 10yr Treasury jumping from 4.0% to 4.5% in a week as tariff uncertainty eased and expectations for future growth improved. Inflation, measured by the Consumer Price Index (CPI), rose 2.3% year-over-year, marking the 50th straight month above the Federal Reserve’s 2% target.(3) The economy added a better-than-expected 167k jobs in April and the unemployment rate remained at 4.2%, marking its 12th straight month in the healthy 4.0%-4.3% range.(4) Job openings totaled 7.2m, pushing the ratio of openings to unemployed people down to 1.0 for the first time since COVID.(5) Q1 GDP was negative for the first time since Q1 2022, largely due to negative net exports as companies increased imports in anticipation of potential tariffs (see figure 2).(6)

The Present

Q1 earnings season is wrapping up, with growth expected to be around 13% versus the 7% expected at the beginning of Q2.(7) Treasury yields and mortgage rates remain elevated after their early April dip, with the 10yr Treasury at ~4.5% and the 30yr mortgage at ~6.8% now.(8)

Recently, the US and China agreed to cancel certain tariffs and drop the rate on the rest to 30% for 90 days, sending stocks higher.(9)



The Future

Analysts forecast 9% earnings growth for all of 2025 and a continued broadening out from the Big Tech names which provided the bulk of S&P 500 earnings growth in 2023 and 2024.(7) Both Wall Street and the Federal Reserve now anticipate 2 interest rate cuts this year; Chairman Powell reiterated that they are in no hurry to cut rates and will remain data dependent.(10,11)

May is one of three months with historically negative returns for stocks, giving us the well-known adage: “Sell in May and go away”.(12) Although a few trade deals have been made, uncertainty remains as tariffs on many more countries are paused. The University of Michigan’s consumer survey showed sentiment dropping to near all-time lows and one-year inflation expectations surging to a staggering 6.5% in response to these uncertainties.(13) However, consumer sentiment and consumer behavior is often not aligned, and, especially since 2020, consumer sentiment is not consistently correlated with market performance. 

1. https://ycharts.com/indices/%5ESPXTR, https://ycharts.com/indices/%5EDJITR, https://ycharts.com/indices/%5ENACTR, https://ycharts.com/indices/%5ERUTTR, https://ycharts.com/indices/%5EMSEAFETR, https://ycharts.com/indices/%5EBBUSATR – Index Performance

2. https://www.cnbc.com/2025/04/09/stock-market-posts-third-biggest-gain-in-post-wwii-history-on-trumps-tariff-about-face.html - Historic gains in the market

3. https://www.investing.com/economic-calendar/cpi-733 - CPI

4. https://www.investing.com/economic-calendar/nonfarm-payrolls-227 - Jobs reports

5. https://fred.stlouisfed.org/series/JTSJOL - Job openings

6. https://www.bea.gov/news/2025/gross-domestic-product-1st-quarter-2025-advance-estimate - Q1 GDP

7. https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_050925.pdf - Earnings outlook

https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/ - Tariff tracker

8. https://fred.stlouisfed.org/series/MORTGAGE30US - Mortgage Rates

9. https://www.bbc.com/news/articles/clyg2939ej2o - US-China trade deal

10. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html – Investor rate expectations

11. https://www.jpmorgan.com/insights/outlook/economic-outlook/fed-meeting-may-2025 - Fed Outlook

12. https://www.nasdaq.com/articles/heres-the-average-stock-market-return-in-every-month-of-the-year – Monthly market history

13. https://www.sca.isr.umich.edu/tables.html - Consumer sentiment

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