If you had invested in the S&P 500 on March 30th, 2025, then slept for a month and woke up on May 1st, only to hear that the index had closed the month down 0.7%, you might have thought to yourself, ‘Oh, I didn’t miss much, did I?’
When taking a longer-term view, the daily swings that seem to happen can be less daunting. As we have previously written many times, extreme daily returns tend to be clustered and occur around the same time. This new extreme return regime is no different as the S&P 500 index posted an annual return in a single day, gaining 9.5% on April 9th, representing the 3rd best day for the market in over 67 years. The Global Trade Wars and “Liberation Day” sparked the latest extreme return regime, which has added 1 of the best and 2 of the worst days to the list. The previous extreme return regimes included Black Monday, the Dot-Com Bubble, the Global Financial Crisis, and COVID-19. As a reminder, the very best days in the market have a tendency to be right after the very worst days.
We could break the month of April into two segments – the S&P 500 index declined 11.2% through April 8th and proceeded to generate an 11.8% return for the remainder to the month. While the overall monthly return of -0.7% for the S&P 500 seems relatively ho-hum, the path throughout the month was far from it! The event that splits the month occurred on April 9th when President Donald Trump announced a 90-day pause on the reciprocal tariffs he placed earlier in the month. Given their more domestic focus, mid-cap and small cap stocks fared worse in April while international and emerging markets performed positively. The Russell 2000 index (small cap equities) was down 2.3% and the Russell Midcap (mid-cap equities) was down 1.0% in April, while the MSCI EAFE Index (international developed equities) was up 4.7% and the MSCI Emerging Markets (emerging markets equities) index was up 1.3%. The U.S. economy showed signs of contraction with first quarter GDP decreasing by 0.3%. In addition to concerns about economic growth, investor sentiment deteriorated due to the uncertainty and volatility created by aggressive tariff policies. In comparison, international markets benefited from relatively stable economic conditions, stimulus announcements, interest rate policy cuts, and generally more positive investor sentiment.
Just as stocks were gyrating in April, so were bond yields. The 10-year Treasury yield closed March at 4.25% but was down to 3.99% on April 4th, only to experience its biggest weekly increase since 2001 – closing at 4.49% on April 11th. As the stock market rebound started on April 9th, the bond market rebound started just a few days later as the 10-year Treasury yield fell to 4.18% by month-end, helping the Bloomberg Aggregate Bond index to be up 0.4% in April. Despite the volatility in interest rates, fixed income continues to play its role well in portfolios as the ballast of the portfolio. An area of provide relief from the volatility storm that equities can bring. We remain constructive on fixed income and believe that it will continue to remain a crucial part of portfolios moving forward.
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Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.
