What We’re Watching in May
As the first quarter of 2025 experienced relative calm in the financial markets, April surprised investors with sharp pullbacks, increased volatility, and rising investor worries. While market swings are nothing new, the reemergence of tariffs, one of the Trump administration’s policy tools, has added uncertainty in the minds of investors and business leaders. For many, this month felt less like a typical bump in the road and more like a sudden derailment.
At Carnegie, we see this moment as a valuable reminder that staying grounded in the face of short-term noise is critical to long-term investing success.

Take Advantage of Volatility
Much of April’s market volatility was driven by economic headlines, specifically by the administration’s aggressive push to reimpose and expand tariffs on key trade partners. The renewed tariff strategy, which largely targets China, Mexico, and Canada, but with ripple effects across Europe and smaller trading nations like Vietnam, has caused market concern.
Tariffs don’t just affect trade flows. Tariffs can cause inflationary pressure, disrupt supply chains, and make long-term corporate planning decisions difficult to make. However, this is not a new problem. It’s a new version of an old one, exactly what markets dislike most, uncertainty.
We are also watching the growing disconnect between the Trump administration and the Federal Reserve. For the first time in decades, we’re seeing a stark policy divergence between the White House actively intervening in trade and the Fed which is trying to stay the course on inflation and rates. The result adds an additional layer of complexity to an already challenged market environment.
We’ve said in the past that volatility isn’t the enemy, it’s part of the journey. From pandemic shocks to trade wars, from interest rate hikes to political infighting, markets always find a reason to react. What matters isn’t the news cycle, it’s how you respond.
Fear is Natural, but Not Always Rational
As volatility rose over the past month, we frequently took calls from clients asking the same question: “Am I going to be okay?” Fear is a natural response to the information people consume in the financial media, particularly when they closely monitor their investment account balances on a daily basis.
At the end of the day, the answer is a resounding ‘yes'. You will be okay, given you stay true to your investment strategy. The benefit of thoughtful portfolio construction is that it accounts for times like this. Many clients hold a year or more of cash or fixed income reserves, which means they aren’t forced to sell stocks in down markets. That buffer provides time and flexibility, reducing the pressure to make rash decisions.
As seen in the chart below, with the exception of the two longest recessions of 1973 and 2008, markets recovered almost fully by the time the recession ended, strengthening the argument that emotion-driven reactions during peak panic lead to worse outcomes for investors.
Navigating Corporate Earnings
We’re more than halfway through Q1 earnings season, and if there’s a theme, it’s uncertainty. Some companies are offering dual forecasts, while others are holding guidance steady but with heavy caveats.
Large financial institutions, such as JPMorgan and Goldman Sachs, have held up thanks to strong trading activity. However, this may be a year where earnings are a ‘throwaway’, with more attention now shifting toward expectations for 2026. In an environment shaped by tariffs and rate speculation, near-term guidance can only go so far.
The Fed’s May Meeting
The Federal Reserve is scheduled to meet in early May, and investors are focused on what the FOMC will do with interest rates. Despite the tariff-induced inflation risk, the market still expects the Fed to hold steady this month, with rate cuts likely deferred to June or later.
If you consider one of our favored indicators, the CME FedWatch, the forecast hasn’t wavered much. Even with the recent noise, inflation expectations remain the same. The 5-year forward inflation rate, a Fed indicator, continues to trend lower.
At the same time, the policy gap between fiscal stimulus and monetary restraint is widening, and that tension is likely to persist.
Conclusion: Revisiting the “Why”
April’s market turbulence offers investors a moment of pause, not panic. The markets will always cycle through phases of uncertainty. What allows investors to weather those phases is clarity: knowing why you’re invested the way you are and trusting in the discipline behind that strategy.
At Carnegie, we remain committed to helping you navigate short-term storms without losing sight of long-term goals. Whether it’s volatility, politics, or policy surprises, our approach remains grounded in research, discipline, and a deep understanding of your financial priorities.
Chart of the Month
For every single recession, the stock market tends to recover by the time the recession ends. About half the time the market is back above breakeven by the end of the recession.

Conclusion: Revisiting the “Why”
April’s market turbulence offers investors a moment of pause, not panic. The markets will always cycle through phases of uncertainty. What allows investors to weather those phases is clarity: knowing why you’re invested the way you are and trusting in the discipline behind that strategy.
At Carnegie, we remain committed to helping you navigate short-term storms without losing sight of long-term goals. Whether it’s volatility, politics, or policy surprises, our approach remains grounded in research, discipline, and a deep understanding of your financial priorities.
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Disclosures: For general informational purposes only. Opinions referenced are as of the date of the email and may be modified due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Past performance is not a guarantee of future results. The information has been obtained from sources we believe to be reliable, but Carnegie has not independently verified the accuracy or authenticity of the information. The discussions, outlook, and viewpoints featured are not intended to be investment advice and do not consider specific investment objectives or risk tolerance you may have. All investments involve risks, including the loss of principal.
Reference to Indexes: An index is a group of specific securities (such as the S&P 500, Dow Jones Industrial Average, and Nasdaq composite), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is neither a guarantee nor indicative of future results.
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