Markets Swing Wildly in April Thanks to Tariffs, but End on a Calmer Note
April was one of the wildest months in years for the financial markets. It started with the S&P 500 falling by 11% in the first eight days, thanks mainly to more tough talk about tariffs by the president. Fears of a trade war fueled volatility throughout April, which ended with the S&P and the Dow Jones Industrial Average both down despite rallying in the final week. The rally was driven partly by strong quarterly earnings data, and partly by the president softening his rhetoric a bit on tariffs. 1 So, is the worst over, or could things get even wilder in the coming months?
Well, anything is possible – but it is a good sign that investors were able to shift their focus away from tariff fears and toward some positive economic news as April ended. In addition to those strong earnings reports, there were also positive updates in April about inflation and unemployment, which also helped calm the markets significantly by month’s end. 2
Not all the economic news was good, though. According to the Commerce Department, the U.S. economy shrank by 0.3% in the first quarter, after three consecutive previous quarters of achieving 2.5%-3% growth.3 More importantly, though, is the fact that although tariff fears have eased a bit, they probably aren’t gone for good.
That’s important because, as I often point out, the markets hate uncertainty, and the potential impact the president’s tariff plan could have on everything from manufacturing to consumer spending is nearly impossible to gauge. That would be true even if the plan were set in stone. The fact that it keeps changing makes the issue even more uncertain. So, as long as the administration keeps talking about tariffs in any capacity, the markets are likely to remain on edge and volatile to some degree.
The Right Perspective
What does all this mean for your portfolios? Well, as you recall, at the end of March, for those of you in our most conservative portfolios of bonds and bond-like instruments, you saw your values still up year-to-date by about 1.3% on average (depending on your individual holdings), and still on pace, pro-rata, for about 5% growth by year’s end. Amid April’s volatility, though, our year- to-date average went into negative territory before partially rebounding and ending the month just about flat.
Although it always feels better to see your values going up instead of down, it’s also important to keep things in perspective. The main thing to remember now is that investing for income first and growth second gives you the ability to endure exactly the kind of volatility and uncertainty we’re experiencing with far less risk and worry than most growth-first investors.
Although your portfolio’s value may be flat year-to-date, consider that the average growth-based investor whose fund manager is striving to match the S&P 500 is more likely to be down around 6% on average for the year. That’s the difference between having a true investment strategy based on math and reliability (the income model) and having a conventional retirement plan based on hope and a huge unknown (investing for growth).
Even more importantly, of course, is the fact that any fluctuations up or down in your portfolio values are largely irrelevant when you’re investing for income first and growth second, because your interest-and-dividend return remains unaffected. You can count on it no matter what, and with many of your investments, you can also count on the return of the full face value of your principal if you hold the investment to maturity and provided there is no default.
Not Our First Rodeo
So, again, the fact that you’re with us and investing primarily in bonds and bond-like instruments means you’re in exactly the right place for a market like the one we’re in now. Of course, most of you already know this from experience. You’ve been with us through many market storms before and know you can count on us to help you weather them with peace of mind.
I mentioned already that one of the things that distinguishes us and gives us the ability to create sound financial strategies is our unique insight. That knowledge is partly a result of specialized training, but it’s also based on experience. Think about it. When the dot-com bubble burst at the start of the century and the markets were in turmoil, everyone thought the world was coming to an end. Not us.
When the markets crashed again after the Financial Crisis and then struggled for six years afterward, everyone thought that was the end of the world. Not us. And it’s been the same story several times since, most notably with the COVID-19 crisis. That helped trigger historic inflation, which led to skyrocketing interest rates and, in 2022, one of the worst years for the stock market in recent history. While others panicked, we stayed calm and got you through it.
Again, the point is, we’re no strangers to any of this, and neither are most of you. You know you can count on us to make the adjustments necessary to protect you from the storm and keep you on track with your long-term financial goals. You also know that if you have concerns or want to talk to us about potential changes you’d like to make, based on market conditions or changes in your own life, you can always reach out to us to have that conversation.
So, give us a call at any time. In the meantime, stay well, know that we’re always here for you, and have a great Memorial Day!
Sources:
1 https://www.investopedia.com/dow-jones-today-04292025-11723943
2 https://www.cnn.com/2025/04/30/investing/us-stock-market/index.html
3 https://www.bea.gov/news/2025/gross-domestic-product-1st-quarter-2025-advance-estimate
Investment Advisory Services offered through Sound Income Strategies, LLC, an SEC Registered Investment Advisory Firm.