April was anything but quiet. Despite a rocky start to the month and a flurry of geopolitical and economic headwinds, markets staged a remarkable recovery. Surprisingly, this rebound wasn’t driven by the Federal Reserve. Chair Jay Powell made it clear: the Fed is holding steady, citing concerns over stagflation.

On April 2, President Trump announced sweeping tariffs: 10% baseline on all imports, 34% on Chinese goods, 25% on autos, and 20% on EU goods.  Markets tumbled, with the S&P 500 posting its worst two-day drop since March 2020.  China and the EU retaliated. On April 9, Trump paused some tariffs for 90 days (excluding China), sparking a sharp market rebound. China tariffs were later raised to 145%, prompting further retaliation. Despite tensions, signs of de-escalation emerged, with potential deals in the works. 

The financial markets witnessed an extraordinary sequence of events, with the S&P 500 undergoing a dramatic 14% decline followed by an impressive 15% rally—all within the span of a single month. This volatility marks a historically rare occurrence, having happened only 7 times since 1978. Historical data from these periods reveals an relatively flat markets over the next 3 months, while the 12-month and 24-month returns averaged a robust 13.7% and 30.7%, respectively. Notably, in 6 of these 7 cases, equities revisited their lows, with the sole exception being March 2020, where an unprecedented surge in fiscal and monetary stimulus—featuring massive government spending and central bank interventions—prevented a retest. Such stimulus measures are not currently on the horizon, so you’d have to think that a re-test of the April lows is likely. 

Despite economic uncertainty, the earnings season has emerged as a critical lifeline for equities. As of this writing, S&P 500 constituents reported  year-over-year earnings per share growth of 12.1%, with 77% of companies having released their results.  This surpasses initial expectations by a wide margin. Eight of the eleven S&P 500 sectors are posting positive earnings growth compared to a year ago, underscoring broad-based corporate strength.

A standout theme this earnings season has been the continued momentum in artificial intelligence (AI). Several large technology companies delivered stellar quarters, setting a positive tone for the sector. Other companies echoed this confidence, reporting no significant shift in demand. This unwavering commitment to AI, despite spring’s economic challenges, signals robust long-term growth potential.

However, challenges loom large. The Federal Reserve, under Chair Jay Powell, has signaled a cautious stance, citing stagflation risks—rising prices coupled with slowing growth—as a primary concern. This has led to a pause in the rate cuts initiated in 2024, contrasting with the aggressive monetary support seen in past crises. Market sentiment has plummeted to levels reminiscent of COVID.  Jobs reports, while beating expectations, hint at underlying weaknesses, with consumer spending showing selective pullbacks in areas like travel. Credit card and bank CEOs, however, report no broad retrenchment, supported by minimal job cuts that have helped sustain consumer activity.

Retail investors have defied this gloom, aggressively buying dips in ETFs, tech stocks, and cryptocurrencies—behavior reminiscent of past recoveries and driven by a shorter investment horizon than that of traditional investors. April featured a rare breadth thrust—where a high number of stocks rallied simultaneously—offers bulls hope, but the lack of immediate index upside keeps the debate open. With smart analysts split on future directions and mixed macro data—including a surprising Q1 GDP decline and a sharp drop in consumer confidence—market timing remains elusive. The key is adhering to a disciplined investment process tailored to your timeline, rather than relying on short-term forecasts.  It’s funny to think that if you had been on vacation for the month of April, with no access to news or stock market information, you might have have wondered why your portfolio was basically unchanged for the month.  You’d have missed the big pullback and the big rally, along with the anxiety that often produces.  I feel like there’s a lesson in there. 

As always, these opinions are mine and may or may not be the same as those of Raymond James.  This is not a solicitation to invest, although we do invite you to review your portfolio with us to see if any changes should be made.  

Past performance may not be indicative of future results. There is no assurance any of the trends mentioned will continue or forecasts will occur.  Investing involves risk including the possible loss of capital. Asset allocation and diversification do not guarantee a profit nor protect against loss.  There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise.

The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. 

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Individuals cannot invest directly in any index.  The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing the stock of 30 companies maintained and reviewed by the editors of The Wall Street Journal.  Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated. 

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Scott Mitchell and not necessarily those of Raymond James.  Expressions of opinion are as of this date and are subject to change without notice.  Raymond James does not provide tax or legal services.  Please discuss these matters with the appropriate professional.