April 2025 - Market Update

The Friedenthal Team

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Following the President’s Liberation Day announcement of reciprocal tariffs on April 2, markets tumbled sharply—but strong Big Tech earnings and a 90-day pause on new tariffs helped the S&P 500 rebound, closing April down just 0.68%.
The U.S. dollar slid sharply on mounting fears of political interference at the Federal Reserve, as speculation grew over potential White House efforts to remove Chair Jerome Powell.
Amid rising policy uncertainty, global investors favored gold over U.S. Treasuries, driving gold prices to a record intraday high of over $3,500/oz.
Technology was the best performing sector, fueled by upbeat earnings and bullish AI outlooks from Microsoft and Meta.
Energy was the worst performing sector at -13.86%, with oil and natural gas prices plunging on persistent concerns over global demand and a growing supply glut.
The U.S.-China trade war remains unresolved, with both countries maintaining punitive tariffs exceeding 100%, keeping pressure on global supply chains and investor sentiment.

Data Dashboard

Stock Market

The S&P 500 rebounded nearly 12% from the April 8 close, driven by oversold technical conditions, the 90-day tariff pause and better than expected earnings of Big-Tech. Smallcap & Midcap stocks underperformed, as did the equal weighted S&P 500, as US stocks broadly declined. Both US stocks and bonds lagged their global counterparts as the US dollar declined 4.09%.

April Monthly Returns (by US Sector)

Bond Market

The 10Y bond yield which had dropped below 4% for the first time since October, shot back up as investors questioned the status of treasuries as a safe haven. Investors flooded into short-duration bonds & money-market funds during the panic, but sentiment improved late April as yields stabilized.

US aggregate bond index returned 0.39% in April, whereas global aggregate bonds returned 2.94%. The high-yield bond spread spiked to 4.5% in the second-week of April (the highest since May '23), but ended the month only modestly higher at 3.84%.

With better than expected inflation numbers, the breakeven rate for the 2-year Treasury-Inflation-Protected-Securities (TIPS) declined to 2.76%.

Economics

The US economy contracted by 0.3% in Q1 2025, amid falling consumer sentiment and weak corporate earnings. The core PCE index and CPI indexes came in lower at 2.65% and 2.80%, respectively. Surprisingly, the economy added 177,000 jobs (Nonfarm payroll) in April, surpassing economists' forecast of 130,000. Unemployment remained steady at 4.2%, with strongest hiring gains in healthcare, transportation and warehousing.

The 30Y fixed mortgage rate (national average) rose slightly to 6.85%. New home sales improved month-over-month.

Consumer sentiment fell to 50.8, the lowest level since June 2022. All eyes are on the potential trade deals between the US & other trading partners, as investors look for some resolution on the tariff front.

The market panic indicator, the Vix index, which had reached as high as 52 at the height of "Tariff-panic", ended the month at 24.70%.

April Economic Dashboard

Tactical Trades

Our Tactical ETF portfolio maintains an overweight position in European equities. Additionally, we've introduced foreign bonds into our tactical fixed income allocation to help ease some of the downward pressure on the US dollar and its impact on US bond performance.

General Client Considerations

2025 IRS annual contribution limits for 401(k), 403(b), most 457 plans and Thrift Savings Plans (TSP) increased from $23,000 to $23,500. Changing your elections at the beginning of the year can help spread out contributions evenly, and ultimately maximize your tax advantaged retirement savings. If you are participating in a company sponsored retirement plan and maxing out your contribution, please reach out to your HR department to ensure your contribution amount has been updated to reflect the new maximums.

Additionally, if you are 50 or older, the catchup contribution limit for 401(k), 403(b) and TSPs has remained the same at $7,500. If you are born in 1975 or earlier, you can contribute up to $31,000 to these accounts in 2025. You do not have to wait until your 50th birthday to make catchup contributions - the contributions can start on January 1st of the year you turn 50.

Starting 2025, if you are aged between 60-63, you can contribute up to a total of $34,750 (eligible for a higher catch-up contribution due to SECURE 2.0).

For more information, check out our newsletter on 2025 Retirement Account Limits.

As always, reach out with any questions or concerns.

Thanks,

The Friedenthal Financial Team