Monthly portfolio brief

Market pressure eases — is this your entry point?

What you need to know

• Market volatility spiked as policy uncertainty peaked, but easing pressures have helped erase much of the recent losses within U.S. equity.
• Globally diversified portfolios benefited from renewed strength within international equity and the relative stability of higher-quality bonds, helping offset weight from hard-hit U.S. equity.
• Uncertainties remain amid ongoing trade negotiations, but don’t let those distract from your portfolio’s purpose.
• Define or revisit your portfolio’s strategy, and consider a systemic investing program to help identify your entry points.
• Also consider overweighting U.S. stocks over international developed-market stocks and bonds, with a focus on quality within stock and bond allocations.

Portfolio tip

Investing at regular intervals can help keep your portfolio aligned with your investment strategy and provide opportunities to add quality investments at lower prices during market downturns.

Where have we been?

Market volatility spiked as uncertainty peaked, but easing pressures have helped erase some losses within hard-hit U.S. equity. Tariff and monetary policy-related discussions heated up in early April as the Trump administration placed pressure on global trade relations and the Federal Reserve. This weighed on the minds of consumers and increased uncertainty surrounding the path of inflation and economic growth.

Markets began pricing in more gloomy expectations, with U.S. equity extending its 2025 decline. U.S. large-cap stocks approached — but narrowly avoided — bear market territory, dropping 19% from February’s peak to mid-April’s low.

Market pressures eased later in April, however, as the U.S. administration pulled back on many tariff threats, opening doors to negotiation. It also appeared to support Fed independence. In a sigh of relief, U.S. equity rallied, erasing much of the month’s losses.

Lower-quality U.S. small-cap stocks were once again the worst performer. They ended the month down by over 2% and nearly 12% lower this year. U.S. large- and mid-cap stocks have held up better, with each down about 5% this year after finishing April only slightly lower, despite the month’s volatility.

International equity built on its 2025 gains, outperforming U.S. equity by a wide margin and benefiting portfolios with global allocations. Developed-market equities performed best, propelled by increasingly stimulative policies within Europe, including European Central Bank rate cuts and greater fiscal spending from Germany.

Chinese policymakers have also indicated additional stimulus is likely, supporting emerging-market equity. However, trade-related tensions between the U.S. and China have weighed on the asset class.

The U.S. dollar’s continued slide has also supported the surge within international equity. When compared to a basket of currencies, the dollar fell about 4% in April and over 8% year to date, driven partly by the increased uncertainty of trade policy. Currency fluctuations highlight another key benefit of international diversification.

What’s more, international equity has outperformed U.S. equity by a large degree, helping offset the weight of U.S. equity on the returns of well-diversified portfolios. As an example, from a total return standpoint, international developed-market large-cap stocks have outperformed U.S. large-cap stocks by over 15% year to date, the strongest start to a year since 1993.

Bonds finished the month little changed but have provided well-diversified portfolios a strong boost over the past year. Interest rates shifted in April as markets reconsidered expectations for inflation, growth and central bank rate cuts. The 10-year U.S. Treasury fluctuated between 4% and 4.5% before ending the month where it began.

One-month returns across fixed income were flat to slightly higher, with higher-quality bonds performing better than lower-quality bonds. Over the past year, however, interest rates have been on a downward trajectory, as growth moderates and central banks ease policy, resulting in solid returns across fixed-income asset classes.

What do we recommend going forward?

One of the biggest obstacles investors face in reaching their long-term goals isn’t investment performance but rather their own actions. Instead of sticking with a long-term strategy, they tend to overreact to short-term market volatility, buying investments that recently performed well and selling those that didn’t. Sometimes, they choose to sit on the sidelines completely.

It’s impossible to time entry or exit points perfectly. And by trying to avoid the worst days in the market, you could miss some of the best, as demonstrated in April. Volatility has eased from its peak, but uncertainty remains as trade negotiations unfold. Consider these steps to help you enter the market and stay invested for the long term:

1. Every goal-oriented portfolio has a strategy — decide on yours. Talk with your financial advisor about your goals and objectives, which should guide your portfolio’s strategy. Balancing your comfort with risk, time horizon and financial goals helps you establish a mix between stock and bond investments that aligns with your needs and creates a strategic starting point to build your portfolio.
   
   We recommend taking a globally diversified approach when building your strategic allocations, the benefits of which have been on full display this year amid volatile and diverging markets. Once you decide on your investment mix, our strategic asset allocation guidance can guide how to allocate your contributions so your portfolio is well-diversified and invested according to your risk and return objectives.
    
2. Set up a systematic investing strategy. Periods of volatility can make it feel increasingly difficult to maintain discipline. Making regular, planned contributions to your portfolio over time can help you remove emotions and stay focused on your financial goal.
   
   Systematic investing strategies, such as dollar cost averaging, can also help ensure your portfolio stays within your intended targets over time by providing natural opportunities to rebalance, enhance diversification and/or add quality investments at lower prices during market downturns.
    
3. Opportunistically, favor quality, particularly within U.S. stock and higher-yielding bond allocations. It’s important to keep your strategic allocation targets in sight so you don’t deviate too far from your investment strategy. With that in mind, we recommend leaning toward equity over fixed income, and we specifically favor U.S. stocks over international developed-market stocks and bonds, given our outlook over the next one to three years.
   
   The preliminary estimate for U.S. growth in the first quarter indicated a slight 0.3% contraction, weighed down by higher levels of imports as purchasers tried to avoid the onset of higher tariffs. However, we expect the U.S. economy to regain strength, given the support of steady labor markets, Fed interest rate cuts and a renewed focus on tax policy and deregulation in the back half of the year.
   
   Within U.S. stocks, we prefer U.S. large- and mid-cap stocks over their smaller-cap peers for their quality. Their more established business models, stronger balance sheets and greater negotiating power are likely to offer a level of stability amid near-term uncertainties while still providing exposure to more economically sensitive segments of the market as growth reaccelerates in the quarters ahead.
   
   We also recommend a focus on quality in bond allocations, the core of which should comprise U.S. investment-grade bonds, in our view. We recently raised U.S. investment-grade bonds back to neutral to help increase the income potential of a fixed-income portfolio, given their yield advantage over higher-quality international bonds, which we now recommend underweighting.
   
   Finally, we suggest shifting from U.S. high-yield bonds toward emerging-market debt to help enhance the quality of a portfolio in this environment. Their greater interest rate sensitivity may further boost returns, given multiple major central banks appear poised to continue cutting rates as growth moderates.

We’re here for you

Trying to time the market perfectly can be stressful and may result in a portfolio misaligned from what you’re ultimately trying to achieve. Talk with your financial advisor about a more disciplined approach, guided by a goal-oriented investment strategy focused on what you can control. They can help ensure your portfolio’s diversification is aligned with your risk and return objectives, backed by rebalancing and systematic investing strategies to help you stay on track.

If you don’t have a financial advisor, we invite you to meet with an Edward Jones financial advisor to help define and execute strategies most appropriate for your circumstances, helping your prepare for any potential volatility that may still lie ahead.

Strategic portfolio guidance

Defining your strategic investment allocations helps to keep your portfolio aligned with your risk and return objectives, and we recommend taking a diversified approach. Our long-term strategic asset allocation guidance represents our view of balanced diversification for the fixed-income and equity portions of a well-diversified portfolio, based on our outlook for the economy and markets over the next 30 years. The exact weightings (neutral weights) to each asset class will depend on the broad allocation to equity and fixed-income investments that most closely aligns with your comfort with risk and financial goals.

Diversification does not ensure a profit or protect against loss in a declining market.

Opportunistic portfolio guidance

Our opportunistic portfolio guidance represents our timely investment advice based on current market conditions and a shorter-term outlook. We believe incorporating this guidance into a well-diversified portfolio may enhance your potential for greater returns without taking on unintentional risks, helping keep your portfolio aligned with your risk and return objectives. We recommend first considering our opportunistic asset allocation guidance to capture opportunities across asset classes. We then recommend considering opportunistic equity style, U.S. equity sector and U.S. investment-grade bond guidance for more supplemental portfolio positioning, if appropriate.