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April Market Recap: Lessons after a Historical Month
April was a roller coaster month for investors as markets reacted strongly to new tariff announcements. Despite dropping by as much as 12% during the month, the S&P 500 (a measurement of 500 large U.S. companies) bounced back to end almost where it started. Recent data showed that the economy shrank slightly in the first quarter as companies rushed to import goods before new tariffs took effect. While both bonds and international stocks went up and down sharply, they helped balance out investment portfolios. This reminds us why staying invested and spreading your money across different investments is so important during uncertain times.
Why staying invested matters after a wild month
April showed us once again why investors need to be prepared for market swings. When the White House announced higher-than-expected tariffs (fees on imported goods) on April 2, markets dropped sharply as investors worried about rising prices and slower economic growth. However, when the administration announced a 90-day pause on most of these tariffs just days later, markets quickly recovered.
| MTD% | YTD% | |
| Dow Jones Industrial Average | -3.20% | -2.88% |
| NASDAQ | +0.85% | -9.65% |
| S&P 500 | -0.68% | -4.92% |
| Russell 2000 | -2.31% | -11.57% |
| MSCI World ex-USA** | +3.69% | +9.25% |
| MSCI Emerging Markets** | +1.34% | +4.39% |
| Bloomberg U.S. Agg. Bond | +0.39% | +3.18% |
Source: The Wall Street Journal, Dimensional Returns
MTD returns: December 31, 2024–January 31, 2025
YTD returns: December 31, 2024–January 31, 2025
**in US dollars
Despite these big ups and downs throughout the month, market indexes finished with only small changes. If you had different types of investments in your portfolio, you likely benefited from gains in bonds and international stocks that helped offset U.S. stock losses.
The VIX index (often called the "fear gauge" because it measures how much investors expect prices to change) briefly reached its highest level since the pandemic. But many of the biggest daily drops were followed by big rebounds, showing why trying to time the market by buying and selling based on daily news can backfire.
The economy took a small step back
A common investor concern is that tariffs might lead to higher prices and slower growth. The latest GDP report show the economy shrank slightly (by 0.3%) in the first quarter of 2025 - the first decline since 2022. This happened mainly because businesses rushed to import products before tariffs took effect. Consumer spending also slowed but remained positive.
All this makes the Federal Reserve's job more difficult as they decide whether to lower interest rates. Currently, investors expect the Fed to cut rates about four times this year, possibly starting in July.
History shows the benefits of staying invested
During uncertain times, one investment principle remains clear: staying invested through market ups and downs has historically been the best path to long-term success. The chart below shows how trying to time the market by selling after each 2% drop can significantly reduce your returns over time. This happens because the best days in the market often come right after the worst days, at times no one can predict.
While market swings can be stressful, these periods often create opportunities as investments become more attractively priced. Focusing on your long-term plan rather than reacting to daily news is the wisest approach.
These market swings should remind us that short-term volatility can happen anytime without warning, and that patient investors who stick with their long-term financial plans are more likely to reach their goals and have better investment experiences.
