
Putting April Market Moves in Perspective
With recent market volatility making headlines, we wanted to share a few quick thoughts and some context behind the moves.
Quick Summary: Markets have been reset following last week’s aggressive tariff announcements. The correction has been compounded by elevated valuations earlier in the year, soft consumer data, and weakness in the tech sector. Still, there are a few constructive offsets: earnings expectations and valuations have come down to more reasonable levels, companies have shown resilience to past supply shocks, and there remains potential for progress on trade. In an environment where economic data may continue to soften, focusing on high-quality businesses becomes increasingly important. For investors with a multi-year outlook and cash on the sidelines, it may be worth considering whether recent declines offer a more attractive entry point. While markets may stay choppy as economic and political developments unfold, some leading companies are now trading meaningfully below recent highs.
Global markets were clearly caught off guard by the magnitude and aggressiveness of the tariff announcement. Upon reflection, we believe several key factors have contributed to the market pullback this year:
- Markets were priced for best-case scenarios for 2025, with high valuations in January and February.
- A challenging February, marked by tech sector weakness and sluggish consumer spending, likely tied to a severe winter and flu season.
- And most recently, the renewed tariff uncertainty including potential retaliatory actions.
As a result, global equity markets are now down roughly 15 to 20% from recent highs. Forward earnings expectations for the S&P 500 have been revised down by about 6%, and valuations have adjusted from 23x to approximately 19x forward earnings—closer to long-term averages.
That said, there are several mitigating points to consider as markets attempt to stabilize:
- Trade negotiations are still fluid, and deals remain possible with several trading partners to negotiate with (see Figure 1: U.S. Import Flows by Country).
- Tariff impacts may be overestimated — many companies can adapt to higher tariffs through vendor negotiations, cost cutting and new revenue channels. A U.S.-based retailer we spoke with noted they grew profits during the initial 2019 tariff wave.
- Markets have priced in a fair amount of risk, with all major indexes down approximately 15 to 20% from recent highs and now trading below historical averages (Figure 2: Market Valuation by Index).
For investors with a multi-year outlook and cash on the sidelines, this may present an opportunity to allocate capital. Within portfolios, we’re actively harvesting tax losses and rotating into stronger opportunities.
As always, we’re here if you’d like to review your plan or explore ways to put capital to work.
Figure 1: U.S. Import Flows by Country
Figure 2: Market Valuations by Index (NTM Price to Earnings)
Source: Tariff graphic and market data per Bloomberg, as of 4/8/25.