* * *
The Quick Facts
- U.S. tariffs triggered a sharp equity market selloff, pushing the CBOE Volatility Index (VIX) to its highest level since 2020 before easing later in April.
- The S&P 500 ended April down 0.7%, recovering from steep mid-month losses but logging a third consecutive monthly decline.
- Treasury yields spiked mid-month amid fiscal concerns, then fell as expectations for Federal Reserve (“Fed”) rate cuts gained traction.
- Gold surged to record highs above $3,400/oz due to safe-haven demand, while oil prices plunged 18.6% on slowing growth and rising supply.
- The U.S. Dollar Index fell 4.8% in April to a three-year low, weighed down by stagflation fears and declining global demand for U.S. assets.
April 2025 was marked by significant turbulence in both equity and fixed income markets, driven largely by aggressive U.S. trade policies and escalating global economic uncertainty. The VIX surged sharply in response to heightened investor anxiety following President Trump’s announcement of sweeping import tariffs, peaking at 52 on April 8, the highest level since the 2020 pandemic. This spike reflected intense market fear during a historic equity selloff, although the VIX gradually retreated to 24.7 by month-end as market conditions somewhat stabilized.
Equity markets experienced a sharp downturn beginning on April 2, when President Donald Trump announced sweeping tariffs on nearly all imported goods, including a 10% baseline tariff and higher rates on Chinese and European imports. This announcement triggered a historic selloff, with the S&P 500 plunging more than 10% in just two days.
The Nasdaq 100 and Russell 2000 small-cap indices entered bear market territory—defined as a drawdown of 20% or more from recent highs. However, the S&P 500’s maximum decline of 18.7% was insufficient to end the bull market that began in September 2022. Although markets recovered strongly later in the month, the S&P 500 still ended April down 0.7% (and 4.9% year-to-date), marking its third consecutive monthly loss.
April Asset Class Performance
The performance of the Global Industry Classification Standard (GICS) sectors was mixed in April, with Technology (+1.7%) leading and Energy (-13.9%) as the biggest laggard. Defensive sectors remain in the lead YTD with Utilities up 5.0% and Consumer Staples 4.6%.
Large Cap Value stocks underperformed Large Cap Growth stocks, with the Russell 1000 Value Index down 3.0% in April (+8.5% over 12 months) compared to a 1.8% gain for the Russell 1000 Growth Index (+14.5% over 12 months). Over the past three years, the Russell 1000 Value Index has trailed the Growth Index by 30.0%. The Russell 2000 Index, a key measure of smaller companies, also had a weak April, returning -2.3% (-11.6% YTD). The ESG segment, as measured by the MSCI USA ESG Select Index, rose 0.1% in April (-5.2% YTD), trailing the S&P 500 by 0.3% YTD. Over the past three years, the ESG index appreciated 36.0%, underperforming the S&P 500 by 5.1%.
Non-U.S. equities outperformed in April, due to a combination of macroeconomic shifts, policy changes, and investor sentiment, with the Europe, Australasia, and Far East (EAFE) Index up 4.7%, while the Emerging Markets (EM) Index rose 1.3%. However, over the past three years, both EM and EAFE have lagged U.S. Large Cap equities by 29.1% and 5.3%, respectively.
In the fixed income arena, U.S. Treasury yields initially fell as investors sought safe havens amid equity market turmoil. However, the trend reversed sharply as concerns grew over U.S. fiscal policies and the potential for increased borrowing. The 10-year Treasury yield surged to 4.5% by mid-April, the highest since 2023, before recovering to close lower at the end of the month. The decline from earlier in the month reflected expectations of possible Federal Reserve rate cuts amid growing economic concerns.
The 10-year U.S. Treasury closed April at 4.16% compared to 4.57% at the end of December 2024, 3.88% at the end of December 2023, and a peak of 4.99% in October 2023. The 2-year U.S. Treasury closed April at 3.60% versus 4.24% at year-end 2024. The 2-year/10-year yield curve disinverted in September 2024, with the 10-year yield now 56 basis points above the 2-year. The U.S. Aggregate Bond Index rose 0.4% in April (+3.2% YTD). The Municipal Bond Index declined 0.8% in April (-1.0% YTD), while U.S. Corporate Investment Grade and High Yield bonds were flat for the month, up 2.3% YTD and 1.0% YTD, respectively.
The month was dominated by macroeconomic turmoil, driven primarily by the re-escalation of U.S. trade tensions and mounting fears of a global slowdown. President Trump’s tariff announcements led to a rapid and strong response in financial markets, sparking widespread concerns over potential stagflation and disruptions in global supply chains. Economic data reflected growing weakness, with U.S. GDP growth slowing and manufacturing activity contracting, while China and Europe also reported declines in industrial output. The U.S. economy contracted by 0.3% in the first quarter of 2025, the first decline since 2022, due to a pre-tariff import rush and more moderate consumer spending. This was one of the first indications of the ripple effects from President Trump’s trade policies.
Gold prices surged another 5.3% in April (+25.3% YTD), reaching record highs above $3,400 an ounce. This rally continued to be driven by investor demand for safe-haven assets amid mounting economic and geopolitical concerns, particularly over a trade policy reset. Oil futures, as measured by WTI Crude, plunged 18.6% in April to $58.2/bbl., the steepest monthly decline since November 2021. Contributing factors included escalating trade tensions, an economic slowdown, and OPEC+ production increases.
Bitcoin started April around $76,000 and rebounded to close the month at $94,581—a 14.8% gain. The DXY Index, which measures the strength of the U.S. Dollar against a basket of major currencies, fell 4.8% in April and 8.3% YTD, reaching its lowest level in three years. Fears of stagflation, questions about the reserve currency status, and waning global demand for U.S. assets contributed to the dollar’s decline, as investors increasingly sought alternatives. Market volatility surged as both the equity and bond markets reacted to heightened economic and policy uncertainty. The VIX spiked to 52 on April 8 before easing to 24.7 by month-end. The ICE BofA MOVE Index, which measures U.S. Treasury market volatility, also climbed, closing April at 112, reflecting increased anxiety over fiscal policy and interest rate expectations.
Chart of the Month – VIX Historical Chart
The VIX, short for the Volatility Index, is a measure of the stock market’s expected volatility over the next 30 days. It’s often called the “fear gauge” because it tends to spike when investors are worried about market declines. Investors look at very high VIX readings (panic) as buying opportunities (“be greedy when others are fearful”) and very low readings (complacency) as signals to be cautious.
When the VIX breaches 40, it usually coincides with major market selloffs (2008 financial crisis, 2011 debt ceiling crisis, 2020 Covid crash). After the VIX spikes above 40, the S&P 500 tends to perform quite well over the following months and year. Extreme fear often marks capitulation, when panic selling reaches its peak. After maximum fear, markets often stabilize and rebound.
In unpredictable markets, staying the course with a well-researched, long-term strategy and financial plan is often the best approach. Adjusting risk, rebalancing portfolios, and maintaining liquidity can help navigate uncertainty.
In 2025, the VIX has remained elevated compared to historical levels, reflecting persistent market uncertainty. As of May 1, the VIX sits around 24.7, well above its long-term average of approximately 19.5, after spiking to 52 in April due to renewed global trade tensions and geopolitical instability.
Quote of the Month
“You can’t predict, you can prepare. Volatility is not risk; volatility is opportunity.” – Howard Marks, American investor and writer, Co-chairman of Oaktree Capital Management
Major Asset Class Dashboard
Curated by Julien Frazzo, Deputy Chief Investment Officer and Michael G. Dow, CAIA, CFA®, Chief Investment Officer
RELATED LINKS
You’re Invited: Macro & Markets: May 2025 – An Update from Chief Investment Officer, Michael G. Dow
Staying Grounded in a New Trade Era
Important Disclosure: The information contained in this article is for general informational purposes only. Opinions referenced are as of the publication date and may be modified due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Past performance is not a guarantee of future results. Beacon Pointe has exercised all reasonable professional care in preparing this information. The information has been obtained from sources we believe to be reliable; however, Beacon Pointe has not independently verified or attested to the accuracy or authenticity of the information. The discussions, outlook, and viewpoints featured are not intended to be investment advice and do not consider specific investment objectives or risk tolerance you may have. All investments involve risks, including the loss of principal. Consult your financial professional for guidance specific to your circumstances. This document has been prepared with the assistance of Microsoft Copilot, an AI-powered tool designed to enhance productivity and provide support in drafting, editing, and organizing content. Microsoft Copilot leverages advanced AI models to generate text based on user input. Although Copilot generates original content based on user input, there is a risk that the generated text may inadvertently resemble existing works that may not be properly cited.
