After a Wild Start of the Year, Where Does the Stock Market Stand Now?

The first five months of 2025 have proven to be unpredictable and turbulent for Wall Street, leaving professional investors grappling with how to navigate such volatile conditions. Despite an impressive May performance—the best for the S&P 500 in over a year and the strongest May since 1990—the benchmark index is still treading water for the year, barely up and lagging behind most international markets. In fact, 2025 is shaping up to be one of the worst starts to a year for U.S. equities since the 1950s.

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This sluggish performance is all the more surprising considering the S&P 500 recently rebounded from its lowest point since December 2023, reached in April. As of now, the index is within 4% of its all-time high. However, numerous uncertainties continue to cast a shadow over the market’s path forward.

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Factors such as former President Donald Trump’s renewed trade tensions, concerns over slowing economic growth, ongoing geopolitical risks, and questions surrounding the Federal Reserve’s next move on interest rates have left corporate leaders wary. In fact, the Conference Board’s latest CEO confidence survey shows executive sentiment is the most pessimistic it’s been since 2022.

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Adding to the challenge, the market is heading into June, a month that has historically delivered muted returns. Over the last 30 years, June has offered an average return of virtually zero for the S&P 500. With Wall Street typically easing into its summer slowdown during this time, there’s a good chance the market could end the month right where it started.

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Given the current backdrop, many investors are unsure of how to proceed. Eric Beiley, executive managing director of wealth management at Steward Partners, describes the current market as “a chaotic storm” that’s difficult to trade through.

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He’s currently holding nearly 10% of his portfolio in cash while increasing exposure to international and defensive stocks—companies that tend to perform more steadily during uncertain times. Beiley believes the gains in May have restored some investor confidence, but he favors staying cautious until more clarity emerges regarding trade policies and interest rate decisions.

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Looking at the broader picture, 2025 has presented a dramatic reversal in fortunes. Despite the strong May rally, the S&P 500 has only climbed about 0.5% for the year—barely a blip compared to the over 20% gains seen in both 2023 and 2024. That kind of back-to-back performance hasn’t occurred since the late 1990s, making this year’s stagnation all the more striking.

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Still, historical trends suggest that the market might not be out of steam just yet. This year marks the third year of the current bull market, which began in October 2022. According to CFRA chief investment strategist Sam Stovall, the third year of a bull market tends to be its weakest. Since World War II, the S&P 500 has averaged only a 5.2% gain during the third year of bull cycles.

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Additionally, in all 11 previous bull markets that lasted beyond two years, the third year included at least one pullback of 5% or more. In five of those cases, the declines exceeded 10%.

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As for the longevity of this bull run, it has already lasted 31 months, with the S&P 500 rising 65% from its bear market low in October 2022. While that’s impressive, history suggests bull markets typically span around 55 months, based on CFRA data. So despite recent turbulence, there could still be room for further upside—though probably not without a few bumps along the way.

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One potentially positive sign is the broadening of market participation. Much of the recent rally had been concentrated in mega-cap tech names, but 2025 has seen new leaders emerge. Industrial stocks—considered a barometer for economic health due to their role in manufacturing and transportation—are the best-performing sector this year, up 8.2%. This strength suggests a more balanced and possibly more sustainable rally.

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Meanwhile, defensive sectors like utilities and consumer staples, known for stability and strong dividends, are also performing well. On the other hand, consumer discretionary stocks, which include major retailers, automakers, and homebuilders, are among the year’s laggards. Interestingly, the so-called “Magnificent Seven” tech stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—have rebounded sharply, rising 29% since their April lows. Yet they remain down 4.3% year-to-date, underscoring the volatility they’ve experienced.

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Looking ahead, June may not offer much momentum. Historical data shows the S&P 500 has averaged just a 0.2% gain during the month over the past 30 years—far lower than the 0.8% average in the other 11 months. In years following U.S. presidential elections, June has often brought additional weakness, as investors tend to take profits heading into summer, especially after strong Mays like this year’s 6.2% gain.

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In short, while May offered some relief for investors, the rest of 2025 remains uncertain. Between mixed signals from economic indicators, global tensions, and historical market cycles, investors are left treading carefully as they consider their next moves.

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