MARKET COMMENTARY AND OUTLOOK – APRIL 2025

Global Market Performance

April was a bit of a mixed bag for U.S. equities. The technology sector kept things afloat, but some of the big blue chips dragged down the broader indices. The Nasdaq inched up 0.88% thanks to strength in AI and chip names, while the S&P 500 dipped 0.68%.

Sector-wise, it was a rough month for most. Seven out of eleven sectors finished in the red. Energy took the biggest hit, down nearly 14% as oil prices slid. Health Care followed, off 3.8%, largely thanks to UnitedHealth’s earnings miss and full-year guidance cut — a move that wiped out more than a third of its peak $575B market cap from last fall. On the flip side, Tech led the way with a 1.7% gain, and Consumer Staples squeaked out a modest 0.2%.

Globally, things looked brighter. Developed markets (EAFE) rallied 4.69% and emerging markets added 1.34% — a nice tailwind for globally diversified portfolios.

Unemployment ticked up again in March, landing at 4.2% — that’s two months in a row of slight increases. Still, the labor force participation rate held steady at 62.5%, so more folks are staying in the game. On the plus side, payroll growth beat expectations — the economy added 228,000 jobs in March versus the 140,000 forecast. Not bad at all.

Inflation continued to cool. Headline CPI dropped to 2.39% — the lowest we’ve seen since early 2021 — and core inflation slipped under 3% for the first time in nearly three years. That’s meaningful progress. In fact, we even saw a 0.1% decline in the Consumer Price Index — the first negative monthly print since mid-2020. Meanwhile, personal spending rose 0.66%, showing that consumers are still out there spending, just more selectively.

The Fed held rates steady at the March 19 FOMC meeting, keeping the Fed Funds target range at 4.25%–4.50%. With inflation easing, the market’s now expecting a hold again at the upcoming May 7 meeting — that’d mark three in a row.

Gold had another breakout month in April, briefly cracking a record high of $3,500 an ounce before settling back to $3,288 — still a strong finish. On the flip side, oil prices fell off a cliff. Brent crude dropped 14.4% to $66.13 a barrel, and WTI wasn’t far behind, sliding nearly 12% to $63.30. That pullback also nudged gas prices down slightly — now averaging $3.26 a gallon nationwide.

Crypto was all over the place in April. Bitcoin rallied hard, jumping 14.5% to finish the month at $94,256. That puts it up modestly year-to-date, though still about 11% shy of its all-time high.

Over the past month, the U.S. yield curve steepened modestly, driven primarily by a rise in longer-term yields. The front end of the curve — from the 6-month to 3-year range — remained relatively flat or even ticked slightly lower, reflecting expectations that the Fed will stay on pause for the time being. However, yields on the 10-year and beyond climbed, with the 20-year and 30-year points pushing closer to 5%. That move suggests markets are repricing long-term inflation risk, a stronger-than-expected economy or growing deficits.

Market Outlook

After the sharp sell-off in early April, markets have bounced back and are now trading like they expect Trump’s newly announced tariffs will mostly get rolled back. It’s a classic case of pricing in the pivot before it happens — markets seem to be betting that cooler heads will prevail on trade policy.

That said, there’s still plenty of caution baked into earnings forecasts. With ongoing worries about tariffs and a potential economic slowdown, analysts have trimmed earnings estimates more than usual — not just for Q2 but all the way through 2025. From December through the end of April, the bottom-up EPS estimate for the S&P 500 in calendar year 2025 dropped by 3.1%, with heavy downward revisions in the Energy (-14.9%) and Materials (-11.9%) sectors. Only a couple of sectors actually saw upward revisions, with Communication Services leading the way at +1.4%.

Despite the cuts, earnings are still expected to grow — just at a slower pace. The blended Q1 earnings growth rate currently stands at 12.8%, and analysts see moderate growth continuing through the rest of the year: 5.7% in Q2, 7.8% in Q3, and 7.1% in Q4. For full-year 2025, the outlook is for a 9.5% earnings bump. Meanwhile, the forward P/E ratio sits at 20.2 — slightly above both the 5-year and 10-year averages. It’s not stretched, but it’s definitely not cheap.

With macro uncertainty and geopolitics still in the mix, volatility isn’t going away anytime soon. For investors, that means leaning into diversification, staying liquid, and keeping some flexibility in the playbook to adjust as conditions evolve through the back half of 2025.