April 2025 has been a dynamic month for markets, but we’re pleased to share that the roller coaster took a positive turn late in the month. Global equity markets traded higher following a softer tone from the U.S. administration, with U.S. equity markets outperforming as indexes recouped some lost ground. Notably, the S&P 500 recorded its third-best day ever on April 19, a reminder of the rewards of staying invested during turbulent times.
This upward movement was spurred by encouraging developments, including the President’s assurance that he has no intention of replacing Federal Reserve Chair Powell and concessionary remarks from Secretary of the Treasury Bessent on China tariffs. While policy uncertainty remains and trade negotiations may continue to impact sentiment, we see reasons for optimism. Improved policy clarity, potential deregulation, and the resilience of U.S. businesses could pave the way for renewed capital flows into the U.S. market.
April’s market movements underscore a critical lesson for long-term investors: time in the market outweighs timing the market. Investors who moved out of equities before April 19 missed out on significant gains. History reinforces this point—some of the S&P 500’s best days, such as March 24, 2020 (post-COVID shutdown) and April 9, 2025 (following President Trump’s “Liberation Day”), occurred during challenging periods. Over the past 30 years, despite events like the dot-com crash, 9/11, the Global Financial Crisis, and COVID-19, the S&P 500 has delivered annualized returns of 10.0%. Missing the best days can significantly impact long-term performance, and we encourage clients to stay the course.
While U.S. assets have enjoyed over a decade of dominance, current valuation premiums suggest it’s an opportune time to diversify. We recommend considering allocations to undervalued segments such as small and mid-cap stocks and non-US equities. These areas have the potential to outperform if market valuations adjust and could benefit from improved global policy clarity. Diversifying into non-U.S. equities can also help mitigate risks tied to domestic market fluctuations.
For those concerned about the U.S. dollar’s reserve currency status, we note that the 10-year U.S. Treasury rate remains stable at its two-year average, and there is no viable alternative to the dollar on the horizon. This stability supports confidence in U.S. assets as part of a diversified portfolio.
Despite the market’s ups and downs, recent stock moves highlight the value of staying invested in a diversified portfolio of high-quality companies. We remain confident in the ingenuity of U.S. businesses and their ability to navigate challenges. At Cardinal Capital, we are committed to helping you achieve your financial goals through prudent, diversified strategies.
If you’d like to discuss your portfolio or schedule a review, please don’t hesitate to reach out. Thank you for your continued trust and confidence in Cardinal Capital.
