Your Monthly Market Newsletter, MAY 2025

May has arrived, following a turbulent month of concerns about how tariffs will impact the economy and potentially increase risk of a recession. Consumer attitudes worsened more than expected in April according to recent data, as President Trump’s tariffs set off warnings of price increases and the potential for a recession. In early April, President Trump hiked tariffs on Chinese goods to a whopping 145% and imposed a 10% tariff to nearly all imports, excluding semi-conductors, pharmaceuticals, and some other items. Many companies have already announced plans for price hikes in response to the tariffs, and others are scrambling for alternative solutions to stay on top of changes in global trade rules. 

According to Education Data Initiative, 42.8 million borrowers have student loan debt, with an average balance of $37,853. For many households, student loan debt can be their most significant monthly expense (after their mortgage), and it can take decades to pay off. Here are some options to help borrowers’ get their debt under control:

• Refinance student loans. This option may be suitable if the loan carries a high interest rate (7% or greater), has high monthly payments, or if you wish to combine multiple loans. Refinancing consolidates those loans into one new loan with a single payment.
• Check eligibility for an income-driven repayment (IDR) plan. This strategy is best if most of your loans are federal, and your loan balance is high relative to your income. The plan restructures your debt and reduces your monthly payments based on your income, family size, state, and the type of federal loan you have. To learn more about IDRs, visit this information page from StudentAid.gov.
• If eligible, seek student loan forgiveness. If you work full-time in the government or any public service job, you may qualify for Public Service Loan Forgiveness (PSLF). For more information about the PSLF program, visit this information page from StudentAid.gov.

As we continue to navigate these times of high inflation and prices, managing your budget is more important than ever. There are a few ins and outs to consider when deciding on a payoff plan for large student loans (or any type of debt). Contact our office today to schedule some time to discuss the best course of action for your needs. We’re here to help! 

Stocks

Volatility persisted in April, with equities initially falling on renewed trade tensions following reciprocal tariff announcements. However, markets rebounded late in the month amid growing expectations for limited tariff exemptions and reassurance of the Federal Reserve's independence from the executive branch. Despite a brief move into positive territory, equities pulled back again on weaker-than-expected GDP growth and ongoing inflation concerns. Nevertheless, the month ended on a strong note, with the S&P 500 and Dow Jones Industrial Average extending their winning streaks to seven sessions and the NASDAQ ending April in the green. Corporate earnings also provided support as early results in earnings season showed growth, even as questions remain about the sustainability of that momentum.

Sector Performance

Six of the eleven sectors posted gains in April. Several previously lagging areas recovered - Technology, Communication Services, and Consumer Discretionary made gains thanks to strength in more defensive sectors such as Utilities and Consumer Staples. Mega-cap tech companies, often called the “Magnificent Seven”, were key contributors to the rebound, buoyed by solid earnings and the potential for softer-than-feared tariffs on select industries. Energy was the weakest performer, declining more than 13% as oil prices dropped sharply on reduced growth expectations and falling demand. Despite broader index declines year-to-date, seven of eleven sectors remain in positive territory for 2025..

Bonds

Income assets rallied in April as interest rates declined, leading to higher bond prices. Weaker-than-expected GDP results contributed to a decline in yields, with the 10-year Treasury yield down 4.3 basis points and the 2-year yield falling 28.0 basis points. Credit spreads widened during the month, reflecting investor concerns about slowing economic growth and its potential impact on corporate earnings in debt repayment. The inverse relationship between bond prices and yields helped provide balance to portfolios amid equity volatility.

Economic Update

Though early signs of tariff-related strain appeared, the economy continued to demonstrate resilience in April. Growth remained healthy with 228,000 jobs added, consistent with pre-pandemic norms. The unemployment rate ticked up to 4.2%, still below the long-term average but rose for a second consecutive month. According to the Institute for Supply Management (ISM), manufacturing fell into contraction as firms accelerated purchases ahead of tariffs, contributing to rising inventories and prices. The service sector expanded, albeit at a slower pace. Though inflation remained above the Fed's 2% target, it showed gradual improvement, easing to 2.4% at the end of March. Retail sales rose 1.4% in March and personal income increased 0.5%, indicating continued consumer strength. Meanwhile, Q1 GDP contracted by 0.3%, though the decline stemmed from a trade imbalance rather than weakening domestic demand. Despite weakening consumer sentiment, the underlying economic fundamentals remain relatively solid.

Why Exercising in Nature is more than the sum of its parts 

When was the last time you went on a nature walk? As temperatures rise, you may be feeling inclined to spend more time outdoors. Recent studies show that one of the most effective ways to boost physical and mental wellbeing is to be active in nature. There is significant evidence that suggests spending time outdoors reduces the stress hormones cortisol and adrenaline to lower blood pressure and relieve anxiety and depression. In many ways, nature can act as medicine. The next time you’re outdoors, take note of the soothing elements of nature and how they put your mind at ease. Perhaps it is the sunlight gleaming through the trees, a birdsong, or the smell of fresh grass. 

Researchers of “green exercise” have found that physical activity conducted in natural surroundings produces greater wellbeing benefits than exercising in a more urban area. The question is: why does nature have such a dramatic healing effect on humans? Kate Whyatt, eco-therapist, suggests that nature provides a quiet and tranquil environment to allow our minds to expand and connect, a critical component of how we process the world around us. Wyhatt stresses the importance of spending free time outdoors to her clients, and often suggests, “you get up, have a nice breakfast, pack your day pack, and off you go. The most difficult decision you make is what you want in your sandwich that day”. Whyatt believes nature is restorative and allows us to get off the “treadmill of cognitive thought.” 

Recent research also suggests that people who spend time outdoors are more likely to care about protecting the environment. If you are planning an upcoming vacation and are passionate about sustainability, Whyatt encourages researching eco-friendly hotels. Sustainable hotels actively implement green initiatives, reduce their carbon footprint, conserve resources, and often offer an array of engaging outdoor activities for guests. Here is a recent article from National Geographic outlining resorts that are a force of good for the environment. 

To learn more about the inspiring impacts of nature on our wellbeing, read the full article here. 

THOUGHT FOR THE MONTH

^{Index Definitions}

^{Dow Jones Industrial Average:The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.}

^{Dow Jones U.S. Real Estate Total Return Index:The index is designed to track the performance of real estate investment trusts (REIT) and other companies that invest directly or indirectly in real estate through development, management, or ownership, including property agencies.}

^{NASDAQ Composite:The NASDAQ Composite is a market-cap weighted index of all issues listed on the Nasdaq stock exchange. It is heavily weighted towards the technology sector.} 

^{S&P 500 Bond Index:The S&P 500® Bond Index is designed to be a corporate-bond counterpart to the S&P 500, which is widely regarded as the best single gauge of large-cap U.S. equities. Market value-weighted, the index seeks to measure the performance of U.S. corporate debt issued by constituents in the iconic S&P 500.}

^{S&P 500 Consumer Discretionary:The S&P 500® Consumer Discretionary comprises those companies included in the S&P 500 that are classified as members of the GICS® consumer discretionary sector.}

^{S&P 500 Consumer Staples:The S&P 500® Consumer Staples comprises those companies included in the S&P 500 that are classified as members of the GICS® consumer staples sector.}

^{S&P 500 Energy:The S&P 500® Energy comprises those companies included in the S&P 500 that are classified as members of the GICS® energy sector.}

^{S&P 500 Financials:The S&P 500® Financials comprises those companies included in the S&P 500 that are classified as members of the GICS® financials sector.}

^{S&P 500 Index:The S&P 500® index is a market-cap weighted index of the largest 500 companies headquartered in the United States. The index covers approximately 80% of available market capitalization.}

^{S&P 500 Utilities:The S&P 500® Utilities comprises those companies included in the S&P 500 that are classified as members of the GICS® utilities sector.}

^{S&P U.S. Aggregate Bond Index:The S&P U.S. Aggregate Bond Index is designed to measure the performance of publicly issued U.S. dollar denominated investment-grade debt. The index is part of the S&P AggregateTM Bond Index family and includes U.S. treasuries, quasi-governments, corporates, taxable municipal bonds, foreign agency, supranational, federal agency, and non-U.S. debentures, covered bonds, and residential mortgage pass-throughs.}

^{S&P U.S. Treasury Bond Index:The S&P U.S. Treasury Bond Index is a broad, comprehensive, market-value weighted index that seeks to measure the performance of the U.S. Treasury Bond market.}

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