S&P 500 Roars Back—2025 Losses Nearly Wiped in Latest Market Surge

Wall Street’s rebound defies gravity—and logic—as the S&P 500 claws back from its 2025 slump. Traders cheer while economists side-eye the Fed’s magic trick.

Here’s how it happened: A cocktail of short-covering, AI hype, and selective amnesia about inflation sent indices soaring. Tech led the charge (again), because why break tradition?

The closer: Another ’irrational exuberance’ trophy for the finance hall of fame—just don’t ask what’s backing this rally besides hope and corporate buybacks.

S&P 500 Returns to Form as US Stock Market Continues Its Bounce Back

With the arrival of US President Donald Trump’s ‘Liberation Day’ tariff plan, the countries’ financial markets began to plummet. Specifically, the America-first, protectionist policy saw the Dow Jones Index fall by 4,600 points, with the S&P 500 dropping about 12%. Moreover, the fall had exacerbated what was already a year of underperformance.

However, things have begun to turn around in a big way. With the US stock market continuing its rally on Tuesday, the S&P 500 is set to regain all of its 2025 losses so far. Specifically, the index jumped 0.9% on the day following a 3.3% jump to start the week.

That reality was shared by the Nasdaq Composite, which jumped 1.7% on Tuesday amid the rally. The increase is not surprising considering the stock market’s tech focus. Alternatively, the Dow Jones has continued its rather poor performance, dropping 0.3% following the release of US inflation data.

The latest Consumer Price Index for April shows that inflation is slowing at its lowest annual rate since 2021. What makes that all the more complicated is the presence of increased tariffs that will have a delayed effect on the economy. Still, the US and China agreed to a 90-day pause on import duty increases. That development drove markets up this week, with hopes that the two sides can avoid a trade war.