April 2025 Monthly Review

A Look Back

The above title comes from the heavy metal band Ratt. It was released in 1984, reaching #12 on the Billboard Hot 100. It was the band’s biggest hit, and Rolling Stone Magazine ranked #20 on their top-Heavy Metal songs of all-time. In full transparency, it is not a band on my typical playlist…but the title certainly fits what transpired in the financial markets in the month of April. As an example, the S&P 500 had quite the round and round. It started the month at 5600...fell to a low of 4685 on April 7th…and then ended the month on a seven-day winning streak to get back to…almost 5600. That is roughly a 15% move, down and back, to finish with a fairly normal return of -.68%. Dubbed “Liberation Day”, April 2nd marked the sweeping tariff announcement from President Trump. These tariffs were designed to address a trade deficit and nonreciprocal trade practices. They were invoked under the International Emergency Economic Powers Act (IEEPA). We don’t have room here for all the details but suffice to say that the scope and levels were more than market watchers were expecting. We know that markets despise uncertainty, and that unrest played out in the first couple of weeks of the month. Also, there was some initial lack of clarity and mixed messages that added to investor angst. Near the latter half of the month, the administration announced a 90 day pause on many of the tariffs and signaled that many countries were reaching out to the U.S. in the hopes of working on new trade deals. Coupled with recent reports that showed a pretty resilient economy (the latest Jobs report showed an increase of 177,000 jobs and the unemployment rate unchanged at 4.2%), stocks rallied through the end of the month. Round and Round. We have also seen the continued outperformance of international stocks. Developed countries have beaten the large-cap S&P 500 by nearly 17% so far this year and were positive by 4.58% in April alone. Core bonds eked out a gain of .39% in the month and now stand at 3.18% YTD. Interest rates were not immune to the volatility either. Let’s look at the 10-year U.S. Treasury, usually a pretty boring security. It started the month at 4.25%, went below 4% after the tariff announcements…and then surprised everyone by jumping to over 4.5% a week later. For perspective, you just don’t usually see those kinds of moves without hard economic newsD.

A Look Ahead

Perhaps there has been no other time in my career when I’ve seen more of what I would call ‘headline risk” permeating around the edges of financial markets. I mean, it is always there…an unexpected geo-political event, a surprising economic number, a hidden financial story (think Bernie Madoff). But, over the last several weeks, we have seen markets violently move with social media posts…or even the potential of social media posts and rumors…and in both directions. We believe we can safely say that this current climate is not the healthiest thing. It’s just human nature to feel angst when surrounded by uncertainty in everyday life, and it is not so different when thinking about investing…our savings and 401Ks. It is precisely these times that the three Ps of patience, prudence and perspective really have importance. It’s also when people who manage other people’s money should be most important…to keep emotion out of longer-term investing, and to take advantage of the swings that markets produce in either direction. We recently trimmed after markets rallied after adding to stocks earlier during the dip in early April. That works over time, and kind of defines the round and round of getting back to where we were!