Market Update & Commentary | April 28th, 2025

What Happened Last Week?

  • The market rallied on the week as fear around tariffs and the future independence of the Federal Reserve Bank began to subside.

  • 1/3 of S&P 500 companies have reported Q1 earnings thus far, on average top line growth is 4% and bottom-line growth is 17%. Management teams in large have eliminated guidance entirely or provided bifurcated positive and negative outlooks, thereby increasing overall uncertainty.

  • Interesting Fact: Over the past 10 trading days, stocks on the NYSE recorded 70% advancers on 6 occasions. Historically, since 1950, this sort of breadth momentum occurred 9 times with the market being positive a year later 75% of the time.

Key Events This Week

  • Important economic datapoints to be released this week include JOLTS, Consumer Confidence, and Q1 GDP.

  • Our focus this week will be on corporate earnings as management teams report Q1 earnings and provide commentary as it relates to underlying industry trends and developments. We’ll be paying attention to AAPL, AMZN, CAT, MA, META, MSFT, UPS, and more.

  • The U.S. indices have staged an impressive relief rally, but the core underlying fundamentals regarding economic and profits growth remain challenged. We will get further insight into the hard data and guidance from management teams this week which will dictate whether the rally has been justified.

Impact on Client Portfolios

  • Fixed income portfolios continue to be tilted towards capital preservation with highly rated and lower duration securities. Short term fixed income securities have less price volatility, and we expect short term rates to be more sensitive to Fed rate cuts.

  • Diversification remains key as greater EPS growth is expected from the S&P 493 than Mag-7. Interest rates and growth expectations appear to be driving markets, so investors need to focus on high quality companies with clean balance sheets and a clear path to growth.

  • Muted economic growth, elevated valuations and interest rates are a unique combination for markets. Fixed income may be a less effective offset to equity performance going forward. Investors should look beyond fixed income to hedge the volatility of equity returns.

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