By William Power

Can fund investors exhale a bit?

After slogging to a 5.1% decline in the first quarter, April was a better month for U.S.-stock funds. The average U.S.-stock mutual fund or exchange-traded fund was down 1.1%, according to LSEG data, but that relatively modest decline calmed some investors' nerves.

And funds that invest in the market's leaders -- large-cap growth stocks -- had a positive month, with an average total return of 1.7%.

While markets continue to be touchy -- prone to more of the sudden drops that investors have weathered all year -- they rebounded in the last part of April after the Trump administration softened its stance on tariffs and appeared to make progress on some trade deals.

U.S.-stock funds are now sitting on a 6.3% decline for the year to date, after having rallied 17.4% for all of 2024. The large-cap growth funds are down 7.7%. (See funds-data tables including Mutual-Fund Yardsticks.)

"A mood of cautious optimism is hovering around markets," said Susannah Streeter, head of money and markets at U.K.-based investment company Hargreaves Lansdown, after what she calls the "financial market mayhem" in the first 100 days of Trump's presidency. The tariff pauses have helped, though only to a point: She noted that U.S. markets have still been hammered into a trailing position behind international stocks.

Indeed, international-stock funds were up 3.5% in April, continuing to assert themselves after the robust 6.4% total return in the first quarter. The 10.1% year-to-date gain is, so far, a rare win for international-stock funds over their U.S. counterparts -- as many investors have increased their overseas-stock exposure. For all of last year, international-stock funds trailed U.S. funds with a rise of just 4.8%.

Gold continues to have the Midas touch for investors. As investors have winced at stocks' overall swings and looked for comfort, funds that invest in gold miners and other precious-metals companies are up an average 40.3% for the year to date -- dominating all other categories tracked by LSEG. That total return for gold-oriented funds includes a 7% rise for April, after first quarter's nearly 31% advance.

Bond funds have also risen as investors look for safety from tariff turmoil. The total return of funds focused on investment-grade debt (the most common type of fixed-income fund) was 0.3% in April, after having risen 2.7% in the first quarter. Bond funds are now up 3% for the year to date.

FINANCIAL FLASHBACK

A look back at Wall Street Journal headlines from this month in history

-- 15 YEARS AGO: The 'Flash Crash'

On May 6, 2010, something so strange happened in the stock market that it puzzled exceptionally experienced traders. Without warning, stock prices went into free fall at 2:42 p.m. Eastern time. Within minutes, the Dow had fallen 998.50 points, at the time its biggest intraday point drop in history. Much of the drop reversed but the market was still down by 3.2% at the close.

Some stocks, such as Accenture and Boston Beer, fell by as much as 100% for just a moment before rebounding. The normally ultrasteady Procter & Gamble fell by 35% in two minutes.

The plunge quickly became known as the "flash crash." The questions started before the closing bell. The central puzzle: What caused this?

There's the fat-finger theory -- someone accidentally making a huge stock order, triggering computer-operated algorithms to sell. "The algos didn't precipitate it, but they contributed," says Sam Stovall, managing director of U.S. equity strategy at CFRA.

Another factor could have been the halt in trading by some algo companies. This reduced trading volume and exacerbated the plunge.

Political tension on the streets of Greece, following the European Central Bank's refusal to calm that country's debt market, was yet another idea. "Televisions showed images of standoffs between Greek police and protesters," The Wall Street Journal reported. That may have sent floor traders, yet jumpier.

The overall loss from the flash crash? Not much. Stock exchanges canceled trades from the debacle, and it was as if it didn't happen. At least financially.

-- 50 YEARS AGO: Back in the Game: Many Small Investors, Lured by Bull Market, Resume Stock Buying

-- 90 YEARS AGO: Public Must Be Educated in True Character and Purpose of Markets -- on a front-page article about NYSE President Charles R. Gay's speech to an exchange group

--By Simon Constable

William Power is deputy section editor of Journal Reports in South Brunswick, N.J. Email him at william.power@wsj.com.

(END) Dow Jones Newswires

May 04, 2025 10:00 ET (14:00 GMT)

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