April 2025 will long be remembered for a massive market rout caused by Trump tariffs and their potential repercussions. The first week of April was the worst for Wall Street since 2020. Markets have shed a huge $5.4 trillion in value in the two days that followed President Trump’s big-time tariff announcements on major countries last Wednesday. 

The S&P 500 is now at its lowest level in 11 months. The Nasdaq, small caps and mid-caps have entered a bear market in the first week of April. The Dow Jones and the S&P 500 are in correction territory. Investors are now striving to gauge what lies ahead for the rest of the month.

Backdrop of This Year’s Market Bloodbath

Investors should note that market troubles began in late February when the Chinese AI startup DeepSeek revealed its low-cost artificial intelligence model, which disrupted Wall Street’s tech sector.

Since then, tensions have escalated, especially after the Trump administration unexpectedly unveiled an aggressive tariff policy dubbed “Liberation Day,” on April 2. The S&P 500 has now dropped over 17% from its Feb. 19 peak, making it the steepest decline since 2022 and one of the worst starts to a year on record.

Rising Recessionary Fears

Due to Trump tariff fears, recessionary risks have risen.Goldman Sachseconomists, led by Jan Hatzius, now see a 45% chance of a U.S. recession in the next 12 months, up from 35% last week. Before this, Goldman had been at a 20% recession probability risk, as quoted on Yahoo Finance.

What Lies Ahead?

In more than half of the bear markets since 1945, the S&P 500 hit a low point within two months of initially falling below the 20% threshold. Moreover, forward returns were largely positive, Bespoke pointed out in 2022 (on Forbes), with the index rising an average of 7% and nearly 18%, respectively, over 6- and 12-month periods.

However, bear markets that occur before a recession are more lengthy (lasting 449 days compared to 198 days with no recession), with steeper losses (an average decline of 35% compared to 28%), according to Bespoke. Hence, if the U.S. economy can avoid a recession, stocks would be in a better position going forward.

Investors should note that since 1945, in every instance when the S&P was down by 3% or more in March, it was then higher in April, as quoted on a Zacks.com article. This happened seven times, and each time it was higher in April.

ETF Picks for April

Against this backdrop, below we highlight a few exchange-traded funds (ETFs) that could be stable bets at the current level.  Given the heightened market chaos, it is better to shift into stable, profitable and defensive sectors.

Utilities – The Utilities Select Sector SPDR Fund (XLU Quick QuoteXLU - Free Report)

On a year-over-year basis, eight of the 16 Zacks sectors are expected to enjoy positive earnings growth in Q1, with the Utilities sector earnings projected to grow 14.5%. Utility stocks also get a safe-haven tag. Utilities provide essential services such as electricity, water and natural gas, which people and businesses rely on regardless of economic conditions. This makes the sector non-cyclical, meaning demand remains stable even during recessions.

Utilities can often pass increased costs to consumers through regulated rate adjustments. Moreover, the latest AI boom has brightened the demand for utilities even more as this sector satisfies the AI industry’s energy needs (read: Time for Defensive Sector ETFs?).

Healthcare – Health Care Select Sector SPDR Fund (XLV Quick QuoteXLV - Free Report)

The Healthcare sector is expected to witness 34.1% growth in Q1 earnings. The healthcare sector is “recession-proof” as people need medical care regardless of the economic condition. Many people have private or public insurance that covers care even if personal income declines. The Zacks Rank #1 (Strong Buy) XLV yields 1.73% annually.

Short-Term Bonds – iShares Short Treasury Bond ETF (SHV Quick QuoteSHV - Free Report)

A slowing U.S. economy (if at all happens) will cut inflationary concerns. Many analysts are favoring short-term U.S. treasuries, expecting them to benefit more from future interest rate cuts by the Federal Reserve. Short-term bonds have a lower interest rate and default risks. Moreover, some short-term bond ETFs offer hefty yields. The SHV ETF yields 4.79% annually.

Dividends – ProShares S&P 500 Dividend Aristocrats ETF (NOBL Quick QuoteNOBL - Free Report)

Dividend-paying stocks provide a steady income stream and help mitigate potential losses during weaker market periods. These stocks offer the best of both worlds — safety in the form of payouts and stability in the form of mature companies that are less volatile to the large swings in stock prices.

High-quality dividend ETFs like NOBL, with a history of consistent dividend payments and growth, can offer both income and the potential for capital appreciation over the long term. The ETF yields 2.25% annually (read: Tap Dividend ETFs as Wall Street Wobbles).

Multi Asset ETFs – SPDR SSgA Multi-Asset Real Return ETF (RLY Quick QuoteRLY - Free Report)

The ETF looks to provide exposure to domestic and international inflation-protected securities, real estate securities, commodities, infrastructure companies, and companies in natural resources and/or commodity businesses, which may include agriculture, energy, and metals and mining companies as well as industrial, and utility companies. The ETF RLY yields 3.25% annually.