Monthly Market Commentary: April 2025

The week of April 7 through 11 delivered historic market volatility, as a sudden tariff reversal triggered a rollercoaster ride across US and global markets—from stocks and bonds to commodities and currencies. The S&P 500 started the week on shaky ground, slipping closer to bear market territory before plunging 1.6% on Tuesday in a panic-driven selloff marked by record trading volume. Then came a stunning turnaround Wednesday, with the S&P 500 soaring 9.5%—its biggest one-day jump since the financial crisis—after President Trump announced a 90-day pause on the 10% reciprocal tariffs. But the celebration didn’t last: Thursday brought another sharp drop, this time 3.5%. By Friday, markets ended on a more optimistic note, with the S&P bouncing nearly 2% to notch its best weekly gain in over a year. Behind the scenes, Treasury yields swung wildly, the dollar tumbled, and assets like oil, gold, and Bitcoin reacted to the chaos. All in all, it was a historic week of whiplash across financial markets.

Beneath the market’s turbulence, one bright spot emerged: a long-awaited dip in inflation. In March, the Consumer Price Index (CPI) fell 0.1%—its first monthly decline since 20201. Gasoline prices dropped 6.3% in March, contributing significantly to the overall CPI decline1. However, grocery prices rose 0.5% from February, with notable increases in eggs (+5.9% month-over-month)1. Annual inflation slowed to 2.4%, down from 2.8% in February1. Still, experts caution that newly announced tariffs could push prices higher in the months ahead.

Against this backdrop of inflation anxiety, consumer sentiment took a sharp hit in April. The University of Michigan’s consumer sentiment index dropped to 50.8—down from 57.0 in March and the lowest reading since mid-20222. The decline was broad-based, with all demographics reporting weaker views on business conditions, personal finances, income prospects, and the job market2. Short-term inflation expectations jumped to 6.7%, the highest since 1981, while five-year expectations climbed to 4.4%2. Concern about rising unemployment also grew, reaching levels not seen since 20092—fueling fears that cracks are forming in the labor market and recession risks are mounting.

The bottom line: Amid growing economic uncertainty, the US is experiencing heightened market volatility, investor unease, and growing concerns about a potential recession. While the 90-day tariff pause may offer temporary relief, market volatility is far from over. The US tariff rate remains historically elevated at 26.25%, and higher consumer prices stemming from tariffs might not fully appear until the May CPI report. With trade tensions intensifying, market instability is likely to persist, leaving investors cautious. Moreover, uncertainty surrounding future inflation and labor market conditions could reshape expectations for the Federal Reserve, potentially altering the anticipated two rate cuts this year.

Sources:

1.       Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm

2.       University of Michigan Surveys of Consumers, http://www.sca.isr.umich.edu

PlanWiser Financial, nor any of its members, are tax accountants or legal attorneys, and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional. Tax services are offered independently through PlanWiser Tax. This is being provided for informational purposes only and should not be construed as a recommendation to buy or sell any specific securities. Past performance is no guarantee of future results, and all investing involves risk. Investment advisory services offered through PlanWiser Financial, LLC, a Registered Investment Adviser.