April Market Review

April market review

Uncertainty
reigned through April and likely will continue to do so, at least in the near
term. Markets have reacted, both negatively and positively, to every
headline coming out of Washington. On April 2, President Donald Trump’s
declaration of “Liberation Day” sparked a selloff of 19% in the equity markets
as the announced tariff rates were considerably higher than
expected. Then, amid stronger-than-expected first-quarter earnings and a
softening rhetoric on tariffs, markets recovered 62% of the drawdown by the
close of the month. The effects of the new tariffs won’t be seen in
corporate earnings until second-quarter reports, and so remain uncertain.

“Despite
tariff-related headwinds, we remain constructive on the equity market and
expect positive earnings growth for the year, pushing the S&P 500 toward
our 5,800 target,” said Raymond James Chief Investment Officer Larry Adam.

The markets’
rollercoaster in April was driven by aggressive tariff actions and shifting
policy signals from the administration, including a 10% global tariff and
additional country-specific tariffs as high as 145%. While the administration’s announcement of a
90-day pause on the additional tariffs and new exemptions for select tech goods
offered temporary relief, the baseline 10% tariff remains in place and is
likely to be more durable than expected, as legal and Congressional challenges
face hurdles.

Bond markets
also experienced extraordinary volatility, rattled by tariff headlines and
concerns that President Trump would fire Federal Reserve (Fed) Chair Jerome
Powell. A softer tone on tariffs and walking back the comments about
Powell helped bond yields and took some of the stress out of the market by the
end of the month.

The trade
war and general unpredictability of administrative policy have put downward
pressure on the US dollar over the last three months, and the greenback is down
10% since January 20. This is not unprecedented. The dollar saw a 10% drop over
a similar timeframe in 2009 and 8% to 9% drops in 2003, 2004, 2010 and 2022. In
every case, the dollar ended up bouncing afterward, in varying degrees. It’s
also worth noting that, even with the latest drop, the Dollar Index is only
slightly below the midpoint of its 10-year range and slightly above the
midpoint of the 25-year range.

The
bottom line

It’s helpful
to remember that economic data lags, so the markets will shift on regular
reports and the effects of tariffs on earnings and GDP are yet to be seen.
Expect high levels of volatility to continue as the markets are heavily shaped
by presidential policy. Plenty of uncertainty remains, so changes can happen
quickly.

Pendle Hill
Advisors is proud to contribute to the Montgomery County News with our weekly
curated financial news and topics. If you have any questions about the markets,
your financial plan, or anything, please feel free to reach out to our office
for a no cost initial consultation.

Kent Pendleton, AAMS®

Financial Advisor, RJFS

Pendle Hill Advisors LLC

14375 Liberty St, Ste 109 | Montgomery,
TX 77356

T 936-297-8267

Kent.Pendleton@raymondjames.com | www.raymondjames.com/pendlehilladvisors

Material
created by Raymond James for use by its advisors. Securities offered
through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment
advisory services are offered through Raymond James Financial Services
Advisors, Inc. Pendle Hill Advisors is not registered broker dealers and is
independent of Raymond James Financial Services.

Investing
involves risk, and investors may incur a profit or a loss. All expressions of
opinion reflect the judgment of the Raymond James Chief Investment Officer and
are subject to change. There is no assurance the trends mentioned will continue
or that the forecasts discussed will be realized. Past performance may not be
indicative of future results. Economic and market conditions are subject to
change. Diversification does not guarantee a profit nor protect against loss.