April delivered a sharp reminder of how quickly global events can ripple through markets. New tariff announcements surprised businesses and investors alike, leading to a drop in equity markets and a spike in concern about the U.S. economy’s direction. While the markets didn’t officially enter bear territory, the reaction reflected deep uncertainty.

Movements like we experienced last month are unsettling for most investors—but they can mean different things depending on where you are in your financial journey. For accumulators building wealth, pre-retirees closing in on financial independence, and retirees living off investments, volatility can test your strategy and mindset. The good news? There are potentially stabilizing signs within the broader economic picture that may point toward opportunity—if you stay patient and focused.

Adding to this evolving picture, early May has brought another major shift in trade policy: the United States and China agreed to a temporary three-month pause on the initially imposed tariffs. As part of this agreement, both countries reduced reciprocal tariffs to 10%, which should ease pressure on supply chains and global trade. In addition to the 10% tariff on China, the U.S. also implemented a 20% tariff tied to China’s role in the fentanyl trade.

What’s Going On, and Why It Matters

Initially, the administration held firm on implementing the tariffs, causing disruptions across equity and bond markets. Uncharacteristically, bond prices didn’t rise (as they usually do in “flight-to-safety” scenarios), which some viewed as a sign of eroding confidence.

Concerns grew that a recession could emerge sooner rather than later. Market indicators started to price in interest rate cuts by summer. Meanwhile, Fed Chairman Jerome Powell signaled a cautious stance, suggesting the Fed would prioritize controlling inflation over providing a quick economic boost.

On April 9, a partial reprieve came with a 90-day delay in most tariffs—except for those on Chinese imports. While markets briefly rallied, concerns remained. Negative GDP growth reported at month-end underscored the real-world impact of economic uncertainty.

Key Data from April

• Inflation: The Consumer Price Index (CPI) showed signs of easing, falling 2.4% year-over-year and 0.1% in March—promising news for everyone managing monthly budgets, especially those on fixed incomes.
• Employment: The labor market remains strong. April added 177,000 jobs, exceeding expectations. Unemployment stayed steady at 4.2%.
• Consumer Confidence: Confidence dropped sharply, hitting a 13-year low in expectations. That anxiety could ripple through consumer spending and business investment.
• GDP: The economy shrank at a 0.3% annualized rate in Q1, reversing a 2.4% increase in Q4 2024. A front-loaded surge in imports ahead of tariffs likely distorted the data—but the slowing is notable.

What Does It All Add Up To?

Despite negative GDP and elevated market swings, many parts of the economy are holding up. However, the spike in imports before tariff deadlines—and the likely drop in Q2—could hide structural weakness. Add slowing consumer and government spending, and the outlook remains cloudy.

The recent U.S.–China trade developments underscore this uncertainty. While the three-month pause and reduced tariffs are a positive step, the markets may remain volatile until a favorable, longer-term agreement is in place.

What does this mean for investors? Whether you’re just starting to build wealth, actively preparing for retirement, or living in retirement, the message is the same: Stay flexible, stay diversified, and maintain a long term focus.

Interest Rates and Policy

The Federal Reserve held interest rates steady in May, acknowledging growing risks while maintaining its focus on inflation control. Powell emphasized that the Fed will not act prematurely.

This is a key message for all investors: higher rates for longer may remain a feature of the landscape. For savers and accumulators, this presents opportunities in CDs and high-yield savings. For retirees, it could offer more stable income—but growth assets still matter. For pre-retirees, portfolio balance is critical.

What This Means for Accumulators, Pre-Retirees & Retirees

Market volatility affects each group differently—but no one is immune to its emotional and financial toll. Here’s what to consider:

If You’re in the Accumulation Phase (20s–50s):

• Stay invested. Time is your biggest asset. Volatility may feel unnerving, but it’s also when future returns are often seeded.
• Stick to your plan. Consistent contributions and diversification matter more than reacting to short-term news.
• Consider opportunities. Downturns can be entry points—especially for tax-advantaged accounts like Roth IRAs.

If You’re a Pre-Retiree (within 5 years of retiring):

• Refresh Your Financial Plan. Now’s a great time to stress-test your retirement plan for inflation, sequence of returns, and longevity.
• Segment your portfolio. Consider building a cash cushion (potentially 1-2 years worth of living expenses) as you move closer toward your planned retirement date. Make sure your cash is liquid and earning an attractive yield.  Many online savings accounts, money markets, and T-Bills are currently earning 3.5% – 4.25% annualized.
• Avoid sudden moves. This stage is about protecting progress—not overreacting to short-term swings.

 If You’re Retired:

• Focus on income sustainability. Ensure you have sufficient cash reserves for short term spending needs. Generally, 1-2 years worth of anticipated portfolio withdrawals may be a good cash target.
• Review withdrawal strategies. Ensure you’re drawing from the right accounts in the right order to minimize taxes and extend portfolio life.
• Stay diversified. Even in retirement, growth assets (i.e. equities) play a key role in offsetting inflation and longevity risk.

Above all, evaluate whether your portfolio allocation is suitable for your risk tolerance and your investment horizon.  A well-diversified portfolio can help to balance out the various risks we face (inflation risk, interest rate risk, market risk, etc.) in looking to meet our specific goals.

April Market Recap – Equities

• S&P 500: –0.76%
• Dow Jones Industrial Average: –3.17%
• S&P MidCap 400: –2.32%
• S&P Small Cap 600: –4.28%
• Volatility: Over half of April’s trading days saw market swings of 1% or more

Bond Markets

• 10-year Treasury: 4.18%
• 30-year Treasury: 4.69%
• Bloomberg U.S. Aggregate Bond Index: +0.39%
• Bloomberg Municipal Bond Index: –0.81%

For income-seekers, bonds are becoming more attractive—but be selective. Quality and duration matter more than ever.

The Bottom Line

Volatility and uncertainty are an ever-present part of investing. Investors who remain patient, follow a buy and hold investing approach, and have created a well-diversified, portfolio are often rewarded with attractive returns over the long run.

The recent trade truce and interest rate stability are welcome developments, but the broader economic story remains complex. Resist the urge to make drastic changes based on headlines.

Your financial plan should reflect more than market activity. It should support your goals, lifestyle, family, and peace of mind. And during times like these, reviewing your strategy with a trusted advisor can help you stay on track—and confident.