Highlights
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So far, economic data has not deviated significantly from recent trends.
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Stocks were volatile but the S&P 500 finished the month roughly flat
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Interest rates were stable during the month
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April was another reminder it’s usually best to ride out the short-term turbulence
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Economic Update
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- Real GDP declined at a 3% annual rate in Q1, slightly lagging the consensus expected -0.2%. The largest drag came from net exports, due to a huge increase in imports of goods. In fact, the drag on GDP due to trade was larger than in any quarter since at least 1947.
- The unemployment rate remained unchanged at 2% in April. Nonfarm payrolls increased by 177,000, ahead of the expected 138,000 consensus figure.
- The ISM U.S. Manufacturing Index (PMI) declined again to 7 in April, remaining in contraction territory. The index measures business conditions in the manufacturing sector, with readings above 50 indicating expansion and those below 50 indicating contraction.
Stocks and Bonds
April proved to be one of the most volatile months for stocks since the early days of the COVID-19 pandemic. Markets reacted sharply to shifting trade policy signals:
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- Following President Trump’s April 2nd Liberation Day tariff announcement, the S&P 500 posted its worst two-day performance since March 2020.
- By April 7th, the index had briefly entered bear market territory, falling -21.4% from its February 19 high on an intraday basis.
- However, sentiment shifted dramatically on April 9th after President Trump announced a 90-day pause on reciprocal tariffs to allow for negotiations. The S&P 500 responded with a surge—its best day since October 2008 and the third-best day in over 25 years.
From the April 8th closing low through month-end, the S&P 500 rallied nearly 12%, trimming its April loss to just -0.7%.
Performance across asset classes was mixed:
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- Mid- and small-cap stocks underperformed, with the S&P 400 and Russell 2000 each down -2.3%.
- The Dow Jones Industrial Average fared worse, posting a -3.1% total return.
- In contrast, the Nasdaq Composite gained 0.9%.
- Foreign and emerging market equities led globally, delivering the strongest returns for the month.
At the sector level, Energy stocks suffered the biggest declines (-13.9%), followed by Health Care (-3.8%), Materials (-2.4%), and Financials (-2.1%).
Technology stocks managed a gain of 1.7%, along with Consumer Staples, Industrials and Utilities, which were all slightly positive for April.
While equities experienced sharp ups and downs in April, bonds served as a source of relative calm. All four major fixed income benchmarks posted slightly positive returns for the month, offering investors a measure of stability amid equity volatility.
Looking beyond April, fixed income has quietly delivered solid results over the past 12 months, with most benchmarks showing mid- to high-single-digit gains.
April once again reminded us that time in the market maters more than trying to time the market.
If you had fallen asleep on March 31st and woken up on May 1st with no context beyond the S&P 500 closing levels – 5,611.85 on March 31st and 5,569.06 on April 30th – you might have concluded it was a relatively quiet month.
For those of us who didn’t enjoy a month-long siesta, the story was anything but uneventful.
As noted in the market commentary above, April delivered the worst two-day stretch since the early days of Covid, marked by heightened volatility and rapidly shifting headlines. In fact, the S&P 500 experienced two of its worst days so far since the turn of the century.
And yet, in classic market fashion, April also featured the third-best single-day gain in over 25 years – another reminder that strong up days often cluster near the worst down days. This underscores the importance of staying invested, even when fear dominates the headlines.
If there’s one lesson from April, it’s this: while history never repeats exactly, it does tend to rhyme. The shorter your investment horizon, the more likely you are to experience a loss. But over time, as your perspective broadens, the odds of success improve.
It seems appropriate to end with one of our favorite Warren Buffett quotes: “The stock market is a device for transferring money from the impatient to the patient.”
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