By Rick Schwerd | May 2, 2025
Our investment team remains committed to sharing updates and market insights to keep you informed. Please look for our next update on May 16.
Solid Labor Market Report
Today’s April jobs report showed the U.S. labor market remains in a fairly moderate position. The country added a better-than-expected 177,000 jobs during the month and the unemployment rate remained at 4.2 percent. Many analysts expect the labor market to slow as the effects of tariffs cause a deceleration in the economy. However, those effects are not showing up in the labor market data yet. Equity markets initially rallied on the news.
Negative GDP Print
Wednesday’s release of the first-quarter GDP data showed a 0.3 percent decline. A surge of imports ahead of tariff increases was the main reason for the negative print. Consumer spending — the biggest component of GDP — did slow but was still up a solid 1.8 percent. Economists expect a rebound in second quarter GDP as imports slow and inventories are utilized. That said, full-year estimates have come down significantly since the start of the year with some economists predicting negative GDP growth in the second half of 2025. We are of the opinion growth will slow but continue to believe recession will be avoided.
Stocks Drop and Rebound in April
After a historically bad start to April, major equity indexes rallied to end the month mostly unchanged. The broad market S&P 500 was down 10 percent for the month on April 4 but ended the month down less than 1 percent. The index currently sits at 5,650, down less than 4 percent this year. The tech-heavy NASDAQ actually ended the month positive after being down 11 percent. It still remains down more than 7 percent for the year. The Dow Jones Industrial Average ended the month down 3.2 percent but remains the best performing of the three major indexes for the year. It is 3.6 percent lower year-to-date after reclaiming 41,000.
Although no trade deals have been announced, the tone has eased significantly since the shock of the April 2 announcements, which has helped lead to the rebound in stocks. The tariff issue remains front and center as the largest concern for markets and the economy. It is likely that we will need to see more progress on deals for the current rebound in equites to continue.
Positive Earnings Season So Far
Through all the noise, it has been a good earnings season so far. According to Evercore-ISI, 287 S&P 500 companies (55-percent market cap) have reported first-quarter results through April 30. Reported sales growth has been 4.2 percent and earnings growth 15.4 percent — surpassing expectations by 0.9 percent and 9.3 percent, respectively. Although a number of firms including Jet Blue, American Airlines and General Motors have pulled future guidance citing fluid macro uncertainty, the forward guidance that has been offered by firms has been better than feared.
Microsoft and Meta (Facebook) both reported very good earnings reports on Wednesday evening, leading tech stocks higher on Thursday. Both companies indicated that they continue to invest heavily in capital spending, helping boost suppliers of tech infrastructure as well. So far at least, it appears the major tech firms are more concerned about falling behind in the Artificial Intelligence race than the current macro-economic uncertainty.
As always, if you have any questions or concerns regarding markets or your financial planning needs, please reach out to us at (518) 415-4401.
About the Author: With almost three decades of financial industry experience, Rick serves as a Senior Investment Officer at Arrow Bank, formerly named Glens Falls National Bank. He oversees individual and corporate retirement plans, personal trusts, investment management accounts, foundations and not-for-profit relationships.