This communication builds on our recent weekly updates and is part of our ongoing effort to stay closely connected with you during this period of continued uncertainty and potential market volatility. We aim to keep you informed with clear, timely insight into our perspective on current events and their impact on investment portfolios.
What Happened This Week?
April brought a steady stream of market-moving developments. Despite the uncertainty, the month’s final week ended on an encouraging note.
U.S. quarterly corporate earnings remained top of mind throughout the week.
- Among the 72% of large U.S. companies that have reported results so far, 76% surpassed consensus expectations.
- Earnings have grown 12.8% year-over-year.
- While management teams continued to cite uncertainty, results have been “better than feared.” Companies, in general, acknowledged a resilient consumer and emphasized their plans to manage through potential tariff impacts in 2025 and beyond.
Below is a brief recap of this week’s daily key events:
- Monday, April 28: Canadians elected Mark Carney, former head of the Bank of Canada and Bank of England. Carney’s administration is expected to prioritize resolving trade tensions with the U.S.
- Tuesday, April 29: The White House signed an executive order to ease specific 25% tariffs on automobiles and parts, providing relief to auto companies.
- Wednesday, April 30: The preliminary report for first-quarter GDP indicated the economy contracted modestly by 0.3% for the first time since early 2022. However, this figure was significantly influenced by an outsized headwind due to importers accelerating shipments in anticipation of tariffs. Consumer spending was positive.
- Thursday, May 1: Economic indicators such as jobless claims and manufacturing surveys signaled slower but ongoing growth.
- Friday, May 2: China’s Ministry of Commerce signaled a willingness to restart negotiations with the U.S. Meanwhile, the U.S. added 177K jobs in April, showing continued labor market resilience.
Market and Portfolio Impact
Renewed optimism surrounding ongoing trade negotiations and better-than-feared earnings reports helped drive a broad-based rally across both stocks and bonds, closing out April on a strong note.
- Interest Rates: Rates rose slightly, reflecting improved investor sentiment about trade and economic developments.
- Bond Markets: With interest rates rising this week, U.S. and global taxable bonds posted modest losses, declining 0.6% and 0.7%, respectively. Municipal bonds were positive, with a weekly return of 0.6%.
- Infrastructure: The asset class gained 2.5% this week, returning 12.2% year-to-date. This week’s performance continued the strong year-to-date performance, which has been boosted by many infrastructure companies’ contractual right to pass through price hikes due to higher inflation.
- Equity Markets: Climbed steadily throughout the week as trade news and economic data improved sentiment around corporate prospects.
- U.S. large-cap stocks rose 2.8% this week but remain down 3.0% year-to-date.
- U.S. small-cap stocks rose 2.7% this week, reflecting improved optimism about global trade negotiations. However, they remain down 8.8% year-to-date.
- International stocks returned 2.5% this week, continuing the positive performance from non-U.S. markets. They are up approximately 10.6% year-to-date.
Closing Thoughts
We understand that the recent market volatility has been unsettling, and we acknowledge the concerns you may be feeling. Volatility and market fluctuations are a regular part of investing that we take into account when designing client portfolios.
In today’s fast-moving environment, it is easy to get caught up in headlines. However, rather than reacting to each development, our focus continues to remain on diligently preparing our portfolios for a wide range of potential scenarios across economies and financial markets. Diversification, thoughtful positioning, and focusing on our clients’ goals and their time horizons help us prepare for and adapt proactively to potential changes in the market’s future direction.
Previous Posts
- Our Perspective: Staying Connected During Uncertain Times
- Our Perspective: Tariff Developments Continue
- Our Perspective: The Recent Tariff Announcements
- Sage Insights: The First Quarter Comes to an End
Learn More About Sage
Disclosures
The information and statistics contained in this report have been obtained from sources we believe to be reliable but cannot be guaranteed. Any projections, market outlooks, or estimates in this letter are forward-looking statements and are based upon certain assumptions. Other events that were not taken into account may occur and may significantly affect the returns or performance of these investments. Any projections, outlooks, or assumptions should not be construed to be indicative of the actual events that will occur. These projections, market outlooks, or estimates are subject to change without notice. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, product, or any non-investment-related content referred to directly or indirectly in this newsletter will be profitable, equal to any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer reflect current opinions or positions. All indexes are unmanaged, and you cannot invest directly in an index. Index returns do not include fees or expenses. Actual client portfolio returns may vary due to the timing of portfolio inception and/or client-imposed restrictions or guidelines. Actual client portfolio returns would be reduced by any applicable investment advisory fees and other expenses incurred in managing an advisory account. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Sage Financial Group. To the extent that a reader has any questions regarding the applicability above to his/her situation or any specific issue discussed, he/she is encouraged to consult with the professional advisor of his/her choosing. Sage Financial Group is neither a law firm nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of Sage Financial Group’s written disclosure statement discussing our advisory services and fees is available for review upon request.
