April 2025 Market Commentary

Market Update and Economic Developments

• Solid earnings reports, hopes for a lessening of U.S.-China trade friction, and resilient U.S. labor data contributed to a strong rally in U.S. equity markets, with the S&P 500 Index erasing its early April 13.8% drop. High Capital expenditures spending and solid earnings from Big Tech assuaged some of the fears held by those who had begun to doubt the “Magnificent 7”, as their seemingly unstoppable two-year bull run began to falter to begin the new year. Meanwhile, International Equities only fell -0.40% for the month, further exemplifying the benefits of a diversified portfolio to weather all types of market environments.

• The CBOE Volatility Index (VIX) peaked at 60.13 points on April 7th, marking its highest point since the onset of the COVID-19 pandemic. Two days later, President Trump issued a 90-day pause on the reciprocal tariffs and the VIX promptly receded to 24.23 points by the end of April as markets anxiously await the outcomes of multi-nation trade negotiations.

• Despite an increasingly uncertain economic environment, the April jobs report was a welcome surprise for investors. The U.S. added 177,000 jobs, beating expectations for the month, while unemployment remained steady, at 4.2%. Some economists remain skeptical of the numbers and urge caution as implications from federal layoffs and the long-term impacts of tariffs remain uncertain.

Fixed Income Market Update and Other Assets

• Preliminary forecasts of the U.S. gross domestic product project a market contraction of 0.3% in the first quarter of 2025. This is mainly attributable to a surge in imports, as companies rushed to stockpile before tariffs went into effect. The U.S. 10-year treasury yield remains at 4.32% as Federal Reserve Chair Jerome Powell continues to see high pressure from the White House and Treasury Secretary Scott Bessent to reduce rates.

• Gold reached an all-time high of $3,500/oz in April as increasingly volatile markets prompted a flight to safety for investors. The commodity is up 22%  year-to-date, and support remains firm despite easing fears from a healthy jobs report and signs of progress in U.S.-China trade negotiations.

• The United States and China are still engaged in an intense trade war, with the U.S. levying 145% against China’s 125% retaliatory tariffs. A brief glimmer of hope for de-escalation emerged this week when a Chinese state media account stated there would be “no harm” in opening trade talks, indicating a softening in position just hours after data showed China’s purchasing managers’ index (PMI) fell below 50 in April, to 49. The White House responded with its aspirations to lower temperatures and find an equilibrium on trade.