I’m Faye Witherall, an Investment Strategist on BlackRock’s Investment and Portfolio Solutions team, here with your Advisor Outlook update for April 2025. This past month, the top questions we received center on the combination of slowing economic growth and heightened policy uncertainty. And the follow-up there is how that backdrop has impacted price action, especially the strong performance we’ve seen from international stocks as the S&P 500 continues to pull lower.
Let’s jump into it:
Policy concerns continue to challenge the macro outlook. We’ve seen trade uncertainty weigh on market returns to start the year, and we see broader risks, not just for the impacted sectors, if it bleeds into a broader loss of confidence.
At the March Federal Reserve meeting, we received an updated Summary of Economic Projections. Growth was revised lower, while inflation was revised higher – we’re continuing to monitor that more ‘stagflationary’ mix.
All of the above mean it was a tough first quarter for U.S. equities on some of that downbeat macro news.
But, importantly, when we look at the composition of those returns, the decline came from multiple compression. So, we have still-strong earnings growth, coupled with sharp declines in price that have led to moderating valuations. The result is potentially more attractive entry points for long-term investors.
Recession risks may be rising, but we still see a low likelihood of recession. Most of the indicators we monitor – across the labor market and lending standards – still look resilient. The starting point matters, and economic growth was so strong that a modest cooling would leave us near the long-term trend rate after several years of above trend growth.
And, finally, diversification has been working. One bright spot this year has been seeing international equities, bonds, and alternatives all do well during the U.S. stock market pullback. We do still have a tactical overweight to U.S. equities, but portfolio builders everywhere can be thankful that the rest of the portfolio has stepped in.
So, with Q1 in the rearview, we enter April with our top takeaways:
- We position for slowing growth, but no recession.
- We stay invested through market volatility.
- And we continue to add to ballast in our portfolios, seeing value in diversifying across geographies and asset classes.
Check out the Full Advisor Outlook deck for more of our best thinking, and if you have any questions or want to talk about what any of these ideas mean for you, please reach out to your local BlackRock Market team.
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