The S&P 500 stock index rose about 2 percent in 2025, while the Nasdaq Composite index increased by 1 percent until early June 2025. You might think from these numbers that it's a slow but stable year. However, it was entirely different, as both indices experienced significant fluctuations, rising and falling; the S&P 500 index dropped more than 15 percent at one point during the year only to return to its normal state.
Wall Street is experiencing a rapid recovery.
The S&P 500 index rose by 20.4 percent over the last 41 trading sessions, marking its third-best performance of this century.
During the same period, the Nasdaq 100 index rose by 27.3 percent, marking its third-largest increase since 2002.
Except for the years 2020 and 2008, Wall Street has not seen such a rapid recovery in the last two decades. As a result, the S&P 500 and Nasdaq 100 indices are now trading just 2.1 percent and 1.8 percent below their historical highs.
Wall Street transitioned from a historically weak market to a historically strong market in just a few days.
U.S. stocks against Treasury bonds.
The market capitalization of the U.S. bond market has fallen to only 68 percent of the stock market's value, the lowest ratio since the 1970s.
This ratio has halved over 14 years, as stocks have significantly outperformed bonds; in other words, the U.S. stock market is now 50 percent larger than the bond market.
Since the beginning of 2020, the total market capitalization of all publicly traded U.S. companies has increased by $38 trillion, or 69 percent.
During the same period, the total value of debt securities increased by $17.8 trillion, or 40 percent, and the U.S. stock market had never been this dominant before.
Trump's tariff fees.
The tariffs imposed by President Donald Trump, whether in February or April 2025, played a significant role in the sharp fluctuations of Wall Street.
Trump announced on Wednesday that a trade agreement with China had been reached, bringing good news for the U.S. stock market.
Washington had previously reached a trade agreement with Britain, indicating that the trade war affecting both the stock and bond markets in the U.S. is on its way to calming down.