Welcome to the monthly market update from Midland Wealth Management. I’m Dan Zeigler, Senior Portfolio Manager. Today, I wanted to take a few moments to share the Investment Team’s views regarding the economy and financial markets.

Tariff Update

The Trump administration made waves early in April with the announcement of “Liberation Day” tariffs—a clear signal the U.S. is serious about closing trade deficits.

The announcement included a universal 10% tariff on nearly all imports, with steeper penalties for certain countries. China was the biggest target, with a massive 145% tariff on all Chinese goods—essentially functioning as a trade embargo. China quickly retaliated with similar tariffs on the U.S. exports.

Amid political backlash and market volatility, the administration issued a 90-day pause on retaliatory tariffs to allow for negotiations, although the 10% base tariff remained in place.

Since then, there’s been talks of potential trade deals—India’s name has surfaced, but nothing concrete yet. Until we see the firm agreements, the path forward remains uncertain.

Market Overview

Liberation Day tariffs hit while equity markets were still recovering from earlier pullbacks.

The S&P 500 dropped 12% in the immediate aftermath of the announcement, but it since clawed back much of the loss, ending April just 0.68% lower.

Markets have remained sensitive to new headlines, and we expect volatility to continue as trade negotiations unfold.

Corporate Earnings

Despite the turbulence, corporate earnings have remained strong. The S&P 500 is tracking just over 14% earnings growth for the quarter, while revenue growth is a more modest–around 4%.

Communications and healthcare sectors have led the way, with companies like Netflix and Alphabet posting earnings growth of 25 and 48%, respectively.

However, companies are increasingly cautious about potential headwinds from tariffs and supply chain disruptions.

Bond Market & the Fed

Treasury markets also saw volatility last month, with the benchmark 10-year yield initially dropping to 4%, then subsequently rising to as high as 4.5% before finally settling at 4.15%. Corporate credit spreads widened–a trend we haven’t seen since 2022–but have begun to ease somewhat.

Meanwhile, President Trump renewed pressure on Chair Powell to cut rates, raising questions about the Fed’s independence.

Markets are now pricing in a rate cut by July, with expectations for the fed funds rate to drop below 3.5% by year-end. Our team believes a quarter-point cut could still be on the table for June.

Jobs Market & GDP

The labor market remains strong. The economy added 228,000 jobs last month, well above the 140,000 expected, with hospitality and health services being the key growth contributors.

Government hiring has supported job gains in recent years, but initiatives from the new Department of Government Efficiency, or DOGE, could curb federal employment growth. Since federal jobs represent just 2% of total payrolls, the broader economic impact should be small.

Unemployment edged up slightly from 4.1% to 4.2%, a move that hasn’t raised major concerns.

GDP data was also released, showing the economy shrank at an annualized rate of 0.3%.

The weaker number was largely driven by companies front-loading imports ahead of tariffs. We expect this dynamic to continue into Q2 while tariff uncertainty lingers.

Supply shocks like this aren’t new. We saw a similar surge in imports back in the first quarter of 2022 as consumers ramped up post-COVID spending and the dollar strengthened.

Typically, import-driven disruptions are temporary and not signs of broader weakness. As long as consumer spending remains healthy and credit flows freely, we expect the economy to keep moving forward.

Outlook

The bottom line is that tariffs will likely continue to contribute volatility as markets digest incoming economic data, corporate earnings, monetary policy shifts, and trade developments. We will keep monitoring risk and opportunities closely, always with a focus on long-term fundamentals and disciplined investment approach.

Thanks again for joining me for this month’s market update.