In Short

• Markets experienced heightened volatility in April following “Liberation Day,” with bonds and equities experiencing significant swings. The S&P 500 ultimately returned -0.7% for the month and -4.9% year-to-date.
• Overall uncertainty has weighed on sentiment and has been a persistent theme in 2025 corporate outlooks, though Q1 earnings season is off to a stronger-than-expected start.
• In our view, diversification across asset class, region and style remains key in periods of heightened volatility. Investors should continue to take advantage of the market fluctuations to deploy cash in a thoughtful manner.

The Month in Markets

So far this year, ever-changing policy landscape has dominated market behavior, causing a significant spike in volatility. On April 2—coined “Liberation Day”—President Donald Trump revealed his list of reciprocal trade tariffs, sending shockwaves through markets globally. The additional tariffs sparked a significant sell-off in global equities, with the S&P 500 falling over 10% in the subsequent two trading sessions and the Cboe Volatility Index (VIX) reaching its highest level since the onset of the COVID-19 pandemic.

Some pressure was lifted from equity markets midway through the month when the Trump administration announced a 90-day tariff pause on non-retaliating countries (though proposed tariffs on China reached upwards of 145%), which enforced the 10% “base” on imported goods from most nations. In response, global equity markets barreled higher with the S&P 500 up 9.5% in a single session, its largest gain since October 2008 and third-best single-day performance since 1950. After all the month’s turbulence, the S&P 500 was down only 0.7% in April and 4.9% year-to-date.

Long-dated U.S. Treasuries also experienced a sell-off in April, with the 10-year yield quickly climbing from below 4% to upwards of 4.6%—the biggest single-week jump in almost a quarter century. Although the sell-off has eased (the 10-year was around 4.16% at month-end), it is still cause for concern as U.S. Treasuries are typically viewed as a haven when equities are volatile.

Uncertainty remained a resounding theme as companies began to report Q1 earnings and issue guidance for the remainder of 2025. For example, United Airlines provided two financial outlooks for 2025 given that, in the company’s opinion, it is “impossible to predict” with any degree of confidence how the economy will fare over the rest of the year. On the flipside, earnings at tech companies including Microsoft and Meta showed a renewed emphasis on artificial intelligence as a tailwind for some of the largest stocks in the index. As of the end of the month, over half of S&P 500 companies have reported earnings, with a blended growth rate of +15.5% that is significantly higher than the anticipated +7.2% as of the end of March.

S&P 500 Companies – Earnings Transcript Mentions of ‘Uncertainty’

 

Source: Bloomberg as of April 30, 2025, Measure captures the three-month rolling sum of mentions for “uncertainty” among S&P 500 companies.

100 Days With the New Administration

April 29 marked the 100th day of Trump’s second term as U.S. president, which is often used as an occasion to pause and reflect on the incumbent’s tenure thus far. The start to his term has been quite eventful, as Trump issued more executive orders than any modern president within this timeframe, with tariffs representing the cornerstone of his administration’s policy, immediately raising revenues from customs duties even as many argue that the American consumer will bear any longer-term costs.

These immediate actions have had significant near-term impacts on the broader economy. For example, the DXY index, which measures the value of the U.S. dollar against a mix of six other currencies,1 experienced a nearly 10% decline in the relative value of the U.S. dollar since Inauguration Day. Measures of consumer confidence have continued to waver with the Conference Board’s Consumer Confidence Index falling to its lowest level since 2011. As mentioned, equity markets declined as well; in fact, the S&P 500 posted its worst performance in the first 100 days of a presidency since Gerald Ford took office in 1974. Meanwhile, the labor market is holding up well, as shown by April’s jobs report, which at the very least indicates that the U.S. labor market is entering this period of slowing economic growth from a strong position.

Looking ahead, growth remains a concern as reflected by the first preliminary reading of U.S. Q1 GDP, which declined by a 0.3% rate (annualized quarter-over-quarter), falling into contraction territory for the first time since 2022. The stark reversal from the strong growth seen at the end of last year was primarily due to a surge in imports as businesses and consumers raced to get ahead of expected tariffs. However, spending and investment may slow as tariffs drive up prices, and uncertainty keeps businesses on hold.

In addition, if long-term U.S. Treasury rates were to rise above 5% (the direction they were headed early in the month), that would further suppress consumer spending, business confidence and corporate investment—potentially outweighing the effect of tax-cut extensions and deregulation upon which medium-term optimism largely rests. On the other hand, successful negotiations and a clear path toward a rollback of most of the retaliatory tariffs announced on April 2 would likely be necessary to shift sentiment more meaningfully.

All things considered, we think investors could face renewed uncertainty after the current period of calm, and therefore should “stay the course” and look to adhere to long-term strategic asset allocation targets in which diversification across asset class, region and style could provide some buffer to volatility and a level of downside protection. We are also encouraging clients to continue to take advantage of market fluctuations to deploy cash in a thoughtful manner given the opportunities we believe are available in small-cap and non-U.S. equities as well as private markets.

Portfolio Implications

Equities were mixed in April with developed non-U.S. substantially higher in part due to dollar weakness, and U.S. stocks generally lower. We recently upgraded our views on global equities and developed non-U.S. equities due to major fiscal stimulus announced in Europe and ongoing advances in corporate governance in Japan, while maintaining an overweight to small and midcaps as we anticipate better performance against a more predictable policy backdrop and lower rates later in the year. Otherwise, we maintain an “at-target” view across equities. Admittedly, short-term volatility related to tariffs may create pressure on certain sectors and individual stocks that are more heavily exposed to supply chain disruption. However, any larger pullbacks (10% or more) could be an appropriate trigger to add to risk, especially for those holding excess cash. In this more challenging environment, we favor employing active management to select companies with high earnings visibility.

Fixed Income was also mixed with some yield volatility throughout the month. The global aggregate index and shorter-dated bonds moved higher, while domestic longer-dated bonds moved lower. We are more constructive on investment-grade fixed income as yields are close to fair value, with shorter-dated bonds in particular presenting little downside risk, in our opinion. With the spread of bond yields over cash rates likely to widen further, we see opportunities to deploy cash tactically, adding and/or shortening duration based on movement in rates. Multi-sector bond funds may be an appropriate vehicle to consider, given the levers a manager can opportunistically pull across sector, duration profile and region. Overall, our soft-landing outlook and debt sustainability concerns make us cautious on longer-dated bonds, even if policy rates are cut in the latter half of the year.

With a fading liquidity drought and an expected pickup in mergers and acquisitions and other deal activity due to a healthy macro backdrop, we believe significant opportunities still exist within Private Markets, as investors should expect new buyout activity and an unlocking of distributions. That said, liquidity and capital solutions providers will likely remain important to work through the substantial backlog of legacy investments. As a result, we continue to see compelling opportunities across secondaries, mid-life co-investments and capital solutions. We are cautious on core private real estate, but this is offset by what we see as abundant market-dislocation opportunities in the value-add and opportunistic sectors and, particularly, real estate secondaries. Neuberger Berman’s deep relationships and unique position within the private equity ecosystem have translated into record levels of deal flow across our platform.

Index Returns as of April 2025

Source: Bloomberg, Total returns as of April 30, 2025. S&P 500 Index is represented by S&P 500 Total Return Index. Nasdaq Composite NASDAQ-Composite Total Return Index. Dow Jones is represented by Dow Jones Industrial Average TR. Large Cap is represented by Russell 1000 Total Return Index. Mid Cap is represented by Russell Midcap Index Total Return. Small Cap is represented by Russell 2000 Total Return Index. All Cap is represented by Russell 3000 Total Return Index. Large Cap Growth is represented by Russell 1000 Growth Total Return. Large Cap Value is represented by Russell 1000 Value Index Total Return. Small Cap Growth is represented by Russell 2000 Growth Total Return. Small Cap Value is represented by Russell 2000 Value Total Return. ACWI is represented by MSCI ACWI Net Total Return USD Index. ACWI ex US is represented by MSCI ACWI ex USA Net Total Return USD Index. DM Non-U.S. Equities is represented by MSCI Daily TR Gross EAFE USD. EM Equities is represented by MSCI Daily TR Gross EM USD. Cash is represented by ICE BofA US 3-Month Treasury Bill Index. U.S. Aggregate is represented by Bloomberg US Agg Total Return Value Unhedged USD. Munis is represented by Bloomberg Municipal Bond Index Total Return Index Value Unhedged USD. Munis Short Duration is represented by Bloomberg Municipal Bond: Muni Short (1-5) Total Return Unhedged USD. Munis Intermediate Duration is represented by Bloomberg Municipal Bond: Muni Intermediate (5-10) TR Unhedged USD. Investment Grade is represented by Bloomberg US Corporate Total Return Value Unhedged USD. High Yield is represented by Bloomberg US High Yield BB/B 2% Issuer Cap Total Return Index Value Unhedged USD. Short Duration is represented by Bloomberg US Agg 1-3 Year Total Return Value Unhedged USD. Long Duration is represented by Bloomberg US Agg 10+ Year Total Return Value Unhedged USD. Global Aggregate is represented by Bloomberg Global-Aggregate Total Return Index Value Unhedged USD. EMD Corporates is represented by J.P. Morgan Corporate EMBI Diversified Composite Index Level. EMD Sovereigns – USD is represented by J.P. Morgan EMBI Global Diversified Composite. Commodities is represented by Bloomberg Commodity Index Total Return. Commodities ex Energy is represented by Bloomberg Ex-Energy Subindex Total Return. U.S. 10-Year Yield is represented by US Generic Govt 10 Yr.