Following the tariff announcements in early April, the market dropped sharply—down 11% in just two days. Investor anxiety surged to record levels as markets reacted to the uncertainty surrounding new trade policies.
However, from that low point, the market rebounded 11.8%, highlighting just how quickly sentiment can shift. Since 1950, there have only been seven instances where the market fell more than 10% in a month and then rebounded more than 10% within the same period. Given the rarity of this type of volatility, we reviewed how the market typically performs after such moves.
(Source: Carson Insights)
Historically, short-term returns (1- and 3-month periods) were often negative following these swings. But looking further out, markets were positive 66% of the time at the 6-month mark—and 100% of the time after 12 months. While this is a small sample, it’s a meaningful one, suggesting that strong rebounds often lead to continued gains over the following year.
In addition, a technical indicator known as the Zweig Breadth Thrust was triggered in April. This occurs when market breadth shifts rapidly from extremely oversold to overbought—a rare signal that has only occurred 17 times since 1950. In every case, markets were positive 6 and 12 months later. While short-term outcomes were mixed, this indicator has historically aligned with strong longer-term performance.
While near-term volatility may continue as new trade agreements unfold, past patterns and technical signals point to a potentially constructive outlook over the next year.
(Source: SubuTrade)
Why the Labor Market Matters
The labor market is a key indicator of economic health. When people are employed, they tend to spend more—and since consumer spending makes up about 66% of the U.S. economy, strong job numbers are essential for sustaining growth.
In April, the economy added 177,000 jobs, beating expectations of 133,000. As a result, the unemployment rate held steady at 4.2%, which is a reassuring sign of stability in the job market.
While low unemployment is certainly encouraging, there are two important considerations to keep in mind.
First, the April jobs report reflects data as of April 8th—meaning it likely doesn’t capture the full economic impact of the recent tariff announcements. The May report should provide a clearer picture of how those developments may be affecting the labor market.
Second, interest rate policy remains a key factor. The Federal Reserve has a dual mandate: to maintain stable prices (control inflation) and support low unemployment. With the Fed holding rates steady in May, they may be signaling a stronger focus on keeping inflation in check rather than stimulating job growth. If rates remain elevated, that could continue to weigh on economic activity—making Fed policy a major driver of market direction in the months ahead.
USA Today – Best Financial Advisory Firms 2025
USA Today has released its 2025 list of Best Financial Advisory Firms, and we’re proud to share that Lake Street has once again been included—ranked #62 nationwide and #4 in the state of Illinois.
This recognition is a reflection of the trust our clients place in us and the dedication of our entire team. As we continue to grow and enhance our services, we remain deeply grateful for the support of our clients and partners who make achievements like this possible.
Articles We’re Reading
US looking to negotiate within new framework with ~18 major trading partners on a rolling basis over next two months (link)
Potential Powell successor Warsh says Fed ‘drift’ has led to systematic errors in conduct of macro policy, blames central bank for failing to control inflationary spiral (FT)
Heightened market volatility has seen hedge funds selling stocks while retail investors still clinging to buy-the-dip strategy (link)
Amazon and Nvidia tell oil and gas executives all options on the table to power AI, including natural gas (CNBC)
Market Snapshot
For the Month Ending 4/30/2025 (Cumulative Returns)1
1Source – Morningstar, Inc. Corporate Bonds is presented as the iShares iBoxx $ Investment Grade Corporate Bond ETF. Municipal Bonds is presented as the iShares National Municipal Bond ETF. High Yield Bonds is presented as the iShares iBoxx $ High Yield Corporate Bond ETF. 10 Year Treasury refers to the valuation of a 10 Year Treasury Note, a debt obligation issued by the U.S. Department of the Treasury. Fed Funds Target represents upper limit of the federal funds target range established by the Federal Open Market Committee. Inflation Rate provided for the purposes of this report by the U.S. Bureau of Labor Statistics. Unemployment Rate calculated by the U.S. Bureau of Labor Statistics. WTI Crude Oil refers to the price of a barrel of West Texas Intermediate NYMEX) Crude Oil. Gold – Spot Price relates to the valuation of an ounce of gold, as traded on the NYSE Arca Exchange. U.S. Dollar refers to the U.S. Dollar Index (DXY). All Returns are denominated in USD (United States Dollar), unless otherwise explicitly noted.
Did You Know?
The term “upset”—now commonly used in sports to describe an unexpected victory—has an interesting connection to the Kentucky Derby.
In 1919, a horse named Upset famously defeated the legendary Man o’ War, handing him his only career loss. Although the word “upset” was already in use before that race to mean “to overturn” or “to disturb,” the event was so shocking that many people mistakenly believed the term originated from that surprising Derby result.
Since then, the Kentucky Derby has become synonymous with thrilling finishes and dramatic underdog wins—living up to the spirit of the word upset every May at Churchill Downs.
Presented by the Investment Committee of Lake Street, an SEC Registered Investment Adviser
The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Diversification does not ensure a profit or guarantee against a loss. There is no assurance that any investment strategy will be successful. Investing involves risk and you may incur a profit or a loss.
