How far the stock market has come without traveling very far is remarkable.
As we near the midway point of 2025, the major U.S. equity benchmarks sit less than 2% from where they began on Jan. 1, which has led some to joke nothing much has happened this year.
Nothing, of course, could be further from the truth. Unexpectedly severe tariff policies sent shockwaves down Wall Street in early April, and while the waters have calmed since a 20% selloff, equities today are behaving quite differently. Once hypersensitive to the daily news flow, this market has become hardened and resistant.
In the past two months, we have seen only two trading days when the S&P 500 fell 1% or more. There were 16 such days in the two months prior. It’s a welcome change for investors still dealing with the trauma from the historic volatility earlier this year.
But the market’s resilience remains a bit curious. It’s not as though the economic uncertainty is totally gone. Several challenges remain and many of them are familiar. The market needs more resolutions to push through all-time highs and continue its bullish path forward.
Here are some remaining challenges:
Tariffs and trade deals
You might remember a 90-day pause to President Donald Trump’s reciprocal tariffs was the catalyst that triggered this stock market recovery. That pause expires July 9, but markets are pricing in very little risk of a second “Liberation Day” and minimal negative impact from tariffs overall. The S&P 500 is actually 5% higher than it was April 2 when Trump first announced “reciprocal tariffs."
As for the 10% baseline tariffs imposed on all foreign goods (excluding Canada and Mexico), it’s possible the courts deem those unlawful. A federal judge already ruled as such in late May, and a Supreme Court ruling could be coming, but in the meantime, those tariffs remain in place.