Where the Stock Market Stands Now After a Wild Start to the Year
(Bloomberg) -- The stock market’s crazy first five months of 2025 have left Wall Street pros in a bit of a pickle.
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Coming off the best month for the S&P 500 Index in a year and a half and the best May since 1990, the benchmark is still basically flat for 2025 and putting up one of its worst starts to a year since the 1950s. In a rare switch, it’s also getting handily beaten by stock markets around the world.
Yes, the S&P rebounded from its lowest level since December 2023, which it hit in April, and is less than 4% from its all-time high. But raging uncertainties from President Donald Trump’s trade wars, to slowing growth, to geopolitical tensions, to the Federal Reserve’s interest-rate path have left corporate executives as pessimistic as they’ve been since 2022, according to the Conference Board’s latest CEO confidence survey.
And to make matters even more complicated, the stock market is about to enter what’s historically one of its quietest months for gains. Over the past 30 years, the S&P’s average return is roughly flat for June, as much of Wall Street begins its summer holiday season. Meaning in 30 days there’s a decent chance we’ll be sitting right where we are now.
With all that going on, what’s an investor to do?
“Trying trade through all of this has been really tough as everyone rides through this chaotic storm,” said Eric Beiley, executive managing director of wealth management at Steward Partners, who has nearly 10% of his portfolio in cash and is buying international and defensive stocks. “May’s gains have given confidence back to investors, but holding put seems like the safer bet for now until we know more about the outlook on trade and rates.”
Here are five charts that show just how rocky the US stock market’s ride has been this year:
The S&P 500’s 19% plunge from its Feb. 19 record — which pushed it into a correction in just 16 trading days and brought it to the brink of a bear market — gave bulls some attractive entry points to buy into the stock market. But after its almost 19% rebound since then, equity valuations have gotten much more stretched.
That, however, doesn’t mean US stocks are actually doing well compared to the rest of the world. The S&P 500 is trailing the MSCI All Country World Index excluding the US Index by almost 12 percentage points in 2025, marking the worst start to a year against its global peers since 1993 and its second-worst ever, data compiled by Bloomberg show.
It’s been a stunning reversal for investors to process. With all the swinging, the S&P 500 is up 0.5% for the year, which pales in comparison to recent memory, as the index notched gains of more than 20% both in 2023 and 2024, something that hasn’t happened since the late 1990s.
But this doesn’t necessarily mean the stock market is done climbing. Historically, the third year of a US bull market, like now, is the weakest. Since World War II, the S&P 500 has averaged a gain of just 5.2% in year three. And in each of the last 11 bull markets that went more than two years, there was a correction of at least 5% in the third year, with five suffering declines of more than 10%, according to Sam Stovall, chief investment strategist at CFRA.
So how does the current bull run stack up historically? The S&P 500 has soared 65% from its bear market low on Oct. 12, 2022. That’s 31 months. Since 1947, bull markets have averaged 55 months, CFRA data show. So there’s still ample room to run, though things may get bumpy after a two-year stretch of outsized gains, according to Stovall.
Improved breadth - meaning broader participation in the rally that has been primarily focused on the biggest technology stocks — could provide some juice for the next leg higher in share prices. The market’s best performing sector this year is industrials, an optimistic sign for shares and growth since those companies are closely tied to the economy and manufacture goods and transport them. The group has climbed 8.2% in 2025.
Defensive plays like utilities and consumer staples companies, which tend to have low valuations and offer robust dividends, are also atop the leader board while consumer discretionary shares that house some of the biggest retailers, homebuilders and automakers are among the worst performers this year. A basket tracking the Magnificent Seven stocks — Alphabet Inc., Amazon.com Inc., Apple Inc., Meta Platforms Inc., Microsoft Corp., Nvidia Corp. and Tesla Inc. — has soared 29% since its April lows, but remains down 4.3% for the year.
So what’s next for stocks? Looking at history isn’t encouraging, at least for the next month.
The S&P 500 has risen just 0.2% on average in June over the past three decades, compared with a 0.8% move in the other 11 months of the year, according to data compiled by Bloomberg. In post-US presidential election years over the past seven decades, the S&P 500 has typically struggled in early June as investors booked profits heading into the summer. This is particularly true if the index gets a strong boost in May, like it did this year with a 6.2% jump.
--With assistance from Elena Popina.
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