What were the best and worst years to have been invested in the S&P 500 (Index: SPX)?

Visual Capitalist's Dorothy Neufeld has answered that question using calendar year investment return data from 1874 through 2024. Although she calls it the "Pyramid of S&P 500 Returns", it's really a bell-shaped histogram chart.

Although this pattern is "bell-shaped", stock market returns are not well described by the kind of normal distribution often used in statistical analysis. Vance Harwood offers an excellent discussion demonstrating how the S&P 500 returns don't fit the standard bell curve distribution, in which he settles on using a Laplace distribution (also known as a double exponential distribution) to better model historic returns. Meanwhile, others find a Lévy stable distribution works better for modeling the extremes in the index' historic returns.

Previously, we found the average annualized return of investments in the S&P 500 starting in any month from January 1871 to the present and extending over all possible holding periods within this period from one month through 130 years in duration is about 9.4%.

Reference

Dorothy Neufield. Charted: The Pyramid of S&P 500 Returns (1874-2024). Visual Capitalist. [Online article]. 3 January 2025.

Vance Harwood. Predicting Stock Market Returns—Lose the Normal and Switch to Laplace. Six Figure Investing. [Online article]. 9 November 2024.

James Houghton and Kristin Osika. Application of Lévy stable distributions to stock market returns using econophysics. Parabola, Volume 59, Issue 1 (2023). [PDF document]. February 2024.

Can you believe that 100 years ago, a can of Campbell's condensed tomato soup was advertised for $0.12?

With 2025's prices coming in more than ten times that sale price, it's fair to recognize that there has been quite a lot of inflation between now and then. Especially in the last four years, which saw the trailing twelve month average sale price of a single 10.75 fluid ounce can of Campbell's tomato soup rise from $0.96 per can in April 2021 to $1.27 per can in April 2025, a 32% increase.

But that's a little misleading because the price of an iconic picnic-size can of Campbell's tomato soup has held mostly steady over the past several months. Here are the tomato soup prices we found at the ten major grocery-selling retailers and grocery stores we track in April 2025 with the amount they changed since our January 2025 snapshot.

• Walmart: $1.26/each, unchanged
• Amazon: $1.26/each, decrease of $0.93 (-42.5%)
• Kroger: $1.39/each, unchanged
• Walgreens: $1.99/each, unchanged
• Target: $1.29/each, decrease of $0.10 (-7.2%)
• CVS: $2.49/each, unchanged
• Albertsons: $1.69/each, increase of $0.20 (+13.4%)
• Food Lion: $1.25/each, unchanged
• H-E-B: $1.31/each, unchanged
• Meijer: $1.29/each, unchanged

Here's our chart tracking the price per can of Campbell's condensed tomato soup since January 2000. If you want to see the full history, click here.

Anecdotally, in 2025, it's still occasionally possible to find a grocery store discounting the sale price of a can of Campbell's tomato soup all the way down to $0.99 or $1.00 per can. Such sale events however are becoming both shorter and much less frequent than they were before the recent period of high inflation.

Image credit: Advertising for Campbell's Tomato Soup, circa 1920s. Public domain image posted by Halloween HJB on Flickr. Creative Commons CC0 1.0 Universal Deed.

The S&P 500 (Index: SPX) had its best week to date in 2025, rising 4.6% to close out the trading week ending on Friday, 25 April 2025 at 5,525.21.

It was an especially good week for the index' mega-cap Big-Tech stocks, with much of the increase of the index driven by their outsized concentration within it. Here's a quick summary of how much the share prices of the S&P 500's Top 10 stocks changed over the preceding week:

• Apple (NASDAQ: AAPL) $209.28 (+7.8%)
• Microsoft (NASDAQ: MSFT) $391.85 (+7.9%)
• Nvidia (NASDAQ: NVDA) $111.01 (+13.4%)
• Amazon (NASDAQ: AMZN) $188.99 (+12.2%)
• Meta Platforms (A) (NASDAQ: META) $547.27 (+11.8%)
• Berkshire Hathaway (B) (NYSE: BRK.B) $530.96 (+2.4%)
• Alphabet (A) (NASDAQ: GOOGL) $161.96 (+9.1%)
• Broadcom (NASDAQ: AVGO) $192.31 (+14.8%)
• Alphabet (C) (NASDAQ: GOOG) $163.85 (+8.8%)
• Tesla (NASDAQ: TSLA) $284.95 (+24.2%)

One of these stocks is not like the others, as Berkshire Hathaway is not a member of the mega-cap Big-Tech club, which makes it a representative of what the stocks of the rest of the index experienced on average during the week. As for the mega-cap Big Tech club, most of these stocks have been hammered during the year-to-date going into the week, with many having been taken down with the deflation of the AI bubble after the 21 February 2025 announcement the code behind China's DeepSeek artificial intelligence system would be made open source.

The change in fortune for these firms is such we may need to consider whether another new market regime is taking shape. The current market regime took hold after 21 February 2025, which is something we'll be evaluating behind the scenes for the dividend futures-based model over the next weeks. We'll also be weighing whether investors have shifted their forward-looking focus from the current quarter of 2025-Q4 toward the more distant investment horizon of 2025-Q4.

Speaking of the dividend futures-based model, here's the latest update of the alternative futures charts. We find the trajectory of the S&P 500 has soared above the redzone forecast range, which we've extended two weeks longer to account for the ongoing high volatility of stock prices.

We're considering the potential of an outward shift in the time horizon of investors because earnings season is now underway, in which companies are projecting their outlooks through the end of the current year, and because of recent changes in investor expectations of rate cuts during 2025-Q4.

On that count, the CME Group's FedWatch Tool projects the Fed will still hold off in resuming its cuts of the Federal Funds Rate until the conclusion of its 18 June (2025-Q2) meeting, at which time it will reduce this interest rate by 0.25%. Afterward, the FedWatch Tool forecasts the Fed will reduce U.S. interest rates three more times before the end of 2025, which is a development that's taken place during the last two weeks. The FedWatch Tool foresees 0.25% cuts in the Federal Funds Rate on 30 July (2025-Q3), 29 October (2025-Q4), and 10 December (2025-Q4).

Here are the market-moving headlines that informed investor expectations during the past week.

Monday, 21 April 2025

• Signs and portents for the U.S. economy:
• Trump warns of economic slowdown unless Fed cuts rates, triggering selloff
• Trump renews attack on Federal Reserve Chair Powell, Dow Jones tumbles 1,000 points
• Oil falls over 2% on signs of progress in US-Iran talks, demand fears
• Fed minions say persistent Bidenflation keeping them from cutting U.S. interest rates:
• With inflation progress slow, Fed's Daly says rate cuts may need to wait
• Fed's Goolsbee hopes US not moving to where monetary independence is questioned
• Bigger trouble developing in China after pre-tariff export push:
• China's export controls are curbing critical mineral shipments to the world
• China's fiscal revenue falls 1.1% in January-March
• China's Q1 automobile exports up 16% y/y, industry official says
• China central bank urges state-owned businesses to prioritise yuan in overseas expansion
• BOJ minions say they'll keep hiking Japan's interest rates if inflation remains on track, but core inflation picks up speed:
• BOJ will keep raising rates if inflation on track, Governor Ueda says
• Japan's core inflation accelerates, complicating BOJ's rate path
• ECB minion says U.S. chief Fed minion is their idea of an "exemplary" central banker:
• Fed's Powell is an exemplary central banker, ECB's Villeroy says
• Nasdaq, S&P, and Dow finished sharply lower as Trump feuds with Powell
• Wall St ends sharply lower following Trump's anti-Powell tirade

Tuesday, 22 April 2025

• Signs and portents for the U.S. economy:
• Oil prices settle up nearly 2% on new Iran sanctions, equities rally
• US auto industry warns new auto parts tariffs will hike prices, cut sales
• US Treasury Secretary says situation with China is unsustainable, source says
• Chief Fed minion's job appears safe… for now:
• Trump: No plans to fire Fed Chair Powell, but wants lower rates
• Stock futures soar as Trump says 'no intention' of axing Fed Chairman Powell
• Fed minions stay noncommittal on when they'll resume rate cuts, think US poverty levels understated in recent years:
• Fed's Kashkari says 'too soon to judge' interest rate path
• Fed's Harker says US poverty levels may be understated
• BOJ minions act like they will try to keep plan to hike Japan's interest rates alive:
• BOJ likely to keep rate-hike signal intact despite Trump tariff risks, sources say
• ECB minions claim they're close to hitting inflation target and that Eurozone economy was looking good before US tariffs:
• ECB close to hitting inflation target, Kazimir says
• ECB survey sees inflation stabilising at 2%
• Euro zone firms were seeing improved business momentum before tariffs, ECB says
• Nasdaq, S&P, and Dow rallied higher a day after markets observed a large sell-off
• Wall Street ends higher on earnings, hopes of easing tariff tensions
• Gold's record run gains further traction; market conquers $3,500/oz

Wednesday, 23 April 2025

• Signs and portents for the U.S. economy:
• Oil falls 2% after sources say OPEC+ to mull accelerating output
• Exclusive: OPEC+ to consider another accelerated oil output increase for June
• US PMIs Scream Stagflation As Manufacturing 'Contracts', Prices Rise, Heaviest Job Cuts Since GFC
• US new home sales jump in March; supply still rising
• Donald Trump to exempt carmakers from some US tariffs
• Fed minions say they'll hold the Federal Funds Rate where it is for longer, plan to keep keep letting maturing U.S. Treasuries drop off their books:
• Fed's Kugler, citing inflation risks, supports steady policy rate
• Fed's Hammack sees more runway for Fed balance sheet cuts
• Bigger bailouts, trouble, stimulus developing in China:
• China property tycoons become creditors’ labourers
• IMF minions don't think BOJ minions will follow through on plan to hike Japan's interest rates:
• IMF expects BOJ to delay further rate hikes due to tariff uncertainty
• ECB minions think Eurozone inflation will keep falling as Eurozone economy keeps flailing:
• ECB's Knot sees inflation falling faster in near term
• ECB expects wage growth to ease considerably this year
• European business growth stalls in April, PMIs show
• Wall Street ends off session high, but rally extends with Nasdaq up 2.5%, S&P up about 2%

Thursday, 24 April 2025

• Signs and portents for the U.S. economy:
• Oil prices settle up on weaker US dollar, mixed economic news
• Global container shipping volume to fall 1% on Trump trade policies, Drewry says
• Fed minions get mixed picture of economy:
• Price hikes, a rush to buy autos, and uncertainty in wake of Trump tariffs -- Fed report
• Fed's Kashkari nervous that trade policy uncertainty will lead to layoffs
• Bigger trouble, anemic stimulus developing in China:
• Chinese factories slow production and send workers home as US tariffs bite
• Tariff-hit China exporters reluctant to heed government calls to sell locally
• ECB minions getting excited for their next Eurozone interest rate cut, starting to think about moving faster on their next moves:
• ECB policymaker Rehn plays up chance of rate cut in June
• ECB's Rehn says central bank may need to lower interest rates, Bloomberg News reports
• ECB eyeing more nimble policy moves amid price shocks, Bloomberg News reports
• Nasdaq rises nearly 3%, S&P adds 2% as Wall Street posts three-day win streak

Friday, 25 April 2025

• Signs and portents for the U.S. economy:
• Oil posts weekly fall on tariff worry and rising supplies
• US shale patch slows down as oil prices sink
• Trump says China's Xi has called him and that US and China are in trade talks, Time reports
• Fed minions say they'll be patient before doing anything about tariff impact to economy, receive criticism from former minion:
• Fed's Hammack says time for Fed to be patient on policy - CNBC
• Former Fed governor Warsh blasts US central bank for leaving its lane
• Some tariff relief for US goods developing in China:
• China exempts some goods from US tariffs
• Wall Street's four-day rally takes it to a nearly 5% weekly advance
• Back To Where We Started (Almost)
• Is the bottom in? S&P 500 makes quick exit from correction territory
• Wall Street ends with weekly gains as trade negotiations, earnings in focus
• Analysts praise Alphabet after results amaze Wall Street

The raw Atlanta Fed's GDPNow tool's projection of what real GDP growth will be in 2025-Q1 dipped to -2.5% from its -2.2% estimate a week earlier, which is misleading. The GDPNow tool's alternate model forecast, which corrects for an extraordinary surge in gold imports during the quarter that's badly skewing the GDPNow tool's raw projection, declined from an estimate of -0.1% growth to -0.4% growth, meaning the real economy likely shrank by a small percentage during the first quarter.

That's not unexpected as a recession forecasting model based on the level of the Federal Funds Rate and the U.S. Treasury yield curve signaled a recession was likely to start during this period more than a year ago. We should get the BEA's first estimate of GDP during 2025-Q1 this week, while the GDPNow tool will reset its focus to the now-current quarter of 2025-Q2.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull who is happy because stock prices are rising, with a rising stock chart in the background".

Longtime readers know we occasionally dabble in prime numbers and sometimes also history. That's why this super short Numberphile video leapt out at us in our YouTube feed, because it combines the two.

In the video, Brady Haran tracks down a copy of Marin Mersenne's 1644 book Cogitata Physico-Mathematica at the Royal Society, in which he listed the prime numbers associated with the formula 2ⁿ - 1, which have since become synonymous with his name. But, as Brady quickly identifies, Mersenne made a couple of mistakes in his published list. Here's the video:

If you would like to read Mersenne's book in the original Latin (or would like to read an English translation of it, Luke Welsh has got you covered!

Almost four centuries later, we know of just 52 Mersenne primes. When and where do you suppose they'll discover the next one?

The U.S. new home market may have grown for the first time since July 2024.

The data for March 2024 is preliminary and will be revised several times before being finalized over the next several months. That said, our first estimate of the time-shifted trailing twelve month average of the total value of new homes sold in the U.S. during March 2025 is $27.87 billion. If it holds, it will represent the first month-over-month increase in new home sales since they peaked in July 2024 at a finalized figure of $28.90 billion.

Revisions can be significant. Our initial estimate of the market capitalization of new homes sold in July 2024 was $31.30 billion, which ultimately proved to be overstated by over 7.6%. In the months since we first reported that first estimate, the number of new homes sold reported by the U.S. Census Bureau has been revised substantially lower, accounting for most of the downward change, with much smaller downward revisions in the average new home price accounting for the balance.

The following charts present the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through March 2025.

Falling-to-flat new home sales trend:

Slow downtrend for home prices:

The big question is will this mark the beginning of the end of what has been a downward trend? While it's too early to make that determination at this time, we think the downward trajectory was interrupted by mortgage rates dropping to their lowest levels in months during March 2025, improving their affordability and boosting sales. In recent weeks however, mortgage rates have increased, which suggests the downward trend for new home sales has not yet been broken.

We'll take a closer look at how the relative affordability of new homes for the typical American household changed in March 2025 sometime early next month.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 23 April 2025. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 23 April 2025. 

Image Credit: Photo by Jennifer Kalenberg on Unsplash.

The market capitalization of the S&P 500 (Index: SPX) shrank during the first quarter of 2025. Standard and Poor reports the index ended 2025-Q1 with a market cap of $49.41 trillion, a net decrease of $2.45 trillion (or 4.7%) from the $51.86 trillion recorded at the end of 2024-Q4.

Much of that decline was concentrated in the top 10 stocks that make up the market cap-weighted index, which collectively lost $2.78 trillion of their market capitalizations. The bottom 493 stocks that make up the index registered a net gain of $325 billion, which offset a portion of the losses registered by the index' ten biggest component stocks.

In percentage terms, the S&P 500's top 10 stocks went from accounting for 37.3% of the total valuation of the index to 33.6%. Their combined market capitalization is almost $16.58 trillion.

The following chart shows the relative shares of the top 10 stocks in the S&P 500 at the end of the first quarter of 2025.

Here are the approximate market capitalizations of each of the S&P 500's top ten component firms at the end trading on 31 March 2025:

• Apple (NASDAQ: AAPL) $3,463,493,610,544 (7.01%)
• Microsoft (NASDAQ: MSFT) $2,900,243,579,728 (5.87%)
• Nvidia (NASDAQ: NVDA) $2,756,960,677,152 (5.58%)
• Amazon (NASDAQ: AMZN) $1,862,677,733,488 (3.77%)
• Meta Platforms (A) (NASDAQ: META) $1,309,309,282,160 (2.65%)
• Berkshire Hathaway (B) (NYSE: BRK.B) $1,012,861,897,520 (2.05%)
• Alphabet (A) (NASDAQ: GOOGL) $938,750,051,360 (1.90%)
• Broadcom (NASDAQ: AVGO) $815,230,307,760 (1.65%)
• Alphabet (C) (NASDAQ: GOOG) $765,822,410,320 (1.55%)
• Tesla (NASDAQ: TSLA) $751,000,041,088 (1.52%)

All but one of these stocks saw their market caps decline during 2025-Q1. Apple (NASDAQ: AAPL) held onto its position as the most valuable company in the world as measured by its market cap, even though it dropped by 10%.

But there's a new Number 2 in this ranking. Or rather, an old Number 2, because Microsoft reclaimed the title of being the second-largest company in the S&P 500 despite its market cap falling by 10.7%. Meanwhile, former second-largest S&P 500 component Nvidia dropped to become the third-largest company in the index after its market cap dropped over 22% in value.

Amazon and Meta Platforms retained their respective fourth- and fifth-largest rankings within the index, despite market cap declines of 13% and 4% respectively.

Sixth place is now held by Berkshire Hathaway, which is the only one of the Top 10 components of the S&P 500 at the end of 2024 that saw its market cap increase during 2025-Q1. The company displaced Tesla, which saw the biggest percentage drop in its market cap among the top 10 index components, falling by 35% into tenth place.

The remaining three stocks, Alphabet (Class A shares), Broadcom, and Alphabet (Class C shares) clung to their seventh, eighth, and ninth place rankings, even though the Class A shares of Alphabet lost nearly 17% of their market cap, Broadcom lost 26%, and Class C shares of Alphabet lost over 19%.

All these losses took place before President Trump imposed global tariffs, which sent most stock prices plunging after 2 April 2025. Nearly all of the losses that occurred during 2025-Q1 took place after 21 February 2025, when the Chinese company behind the DeepSeek artificial intelligence system announced they would make its code open source the following week. That action effectively popped the AI bubble that had been inflating the value of the S&P 500 and many of its biggest component stocks through the end of the quarter.

The arrival of the global tariff war in April 2025 has since expanded the declines in the S&P 500's market capitalization beyond those stocks whose valuations had inflated with the AI bubble of the preceding two years. We'll see that impact in three months when we take our Summer 2025 snapshot of the S&P 500's market capitalization.

References

Standard and Poor. S&P Market Attributes. [Excel Spreadsheet]. 31 March 2025. Accessed 1 April 2025.

The Global Carbon Project has released its 2024 Carbon Budget, detailing where carbon dioxide originates and goes throughout the entire known carbon cycle on Earth. The report is the among first to project the total year values for carbon dioxide emissions by nation. The following chart presents the amount of CO₂ emissions by the world's largest national producers of the greenhouse gas.

As it has been since 2006, China retains its title as the world's largest emitter of carbon dioxide in 2024 by a widening margin with most nations. That includes India, whose emissions have been rising, but at a slower pace than China's CO₂ output. The United States remains the second-largest national producer at about 41% of China's 2024 emissions, even though its output of carbon dioxide emissions has been falling since 2005.

Changing to look at monthly data of how fast carbon dioxide emissions accumulate in the Earth's atmosphere, the trailing twelve month average of the year-over-year change in atmospheric CO₂ levels peaked in January 2025. Since then, the rate of CO&8322; accumulation in the Earth's air has fallen off sharply from January 2025's record high pace.

This data is telling us something important about the state of Earth's economy. Since China is such an outsize contributor to the carbon dioxide that is emitted into the atmosphere, it indicates that China's economy has dramatically slowed since the end of 2024. And that happened before the U.S. imposed much higher tariffs on China's exports to the U.S. on 2 April 2025, which have slowed China's economy further.

In previous slowdowns, China's government has responded by stimulating the country's economy, resulting in higher CO₂ emissions to counter the slowing. Will 2025 be different?

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Online Data]. Updated 14 April 2025. Note: The NOAA appears to have changed its schedule for releasing atmospheric CO₂ concentration data from the Mauna Loa Observatory. Previously, they had regularly reported their revised and latest data during the first week of the month, but since March 2025, have been posting it in the middle of the month.

Image Credit: Friedlingstein, Pierre et al. Global Carbon Budget 2024. GtCO2 slidedeck PDF. 14 March 2025.

The S&P 500 (Index: SPX) lost almost 1.7% in the Good Friday holiday-shortened trading week. The index closed out the week at 5,282.70.

Considerable attention was directed to the U.S. Federal Reserve during the week. With the outlook for dividends having diminished over the past month as the effects of reduced earnings from a slowing economy weighing on it, the timing of when the Fed will resume cutting interest rates has taken on greater importance for investors.

Unfortunately for investors, the Fed sent a strong message they have no plans to cut the Federal Funds rate when it meets next month.

Although Federal Reserve officials pushed back against building pressure to cut U.S. interest rates sooner rather than later, investors now expect them to deliver more rate cuts in the rest of 2025 than they did a week earlier. The CME Group's FedWatch Tool projects the Fed will still hold off in resuming its cuts of the Federal Funds Rate until the conclusion of its 18 June (2025-Q2) meeting, at which time it will reduce this interest rate by 0.25%. Afterward, the FedWatch Tool anticipates the Fed will reduce U.S. interest rates three more times before the end of 2025, one more reduction than forecast a week earlier. The FedWatch Tool foresees 0.25% cuts in the Federal Funds Rate on 30 July (2025-Q3), 29 October (2025-Q4), and 10 December (2025-Q4).

In terms of driving the S&P 500, the Fed's signal it won't cut rates until it meets near the end of the current quarter in June kept investors focused on 2025-Q2 in setting current day stock prices. The latest update of the alternative futures chart shows the trajectory of the S&P 500 dropping into the upper redzone forecast range we added last week.

We're still seeing more-than-typical volatility in stock prices, which we expect to continue in the weeks ahead.

We also expect any changing expectations of what the Fed will do with interest rates will impact the S&P 500's trajectory. Speaking of which, here are the week's market-moving headlines, which are rather dominated by the current attention on the Fed and what it will do.

Monday, 14 April 2025

• Signs and portents for the U.S. economy:
• Trump spares smartphones, computers, other electronics from China tariffs
• Tariffs on imported semiconductor chips coming soon, Trump says
• Oil rises on tariff exemptions and Chinese imports rebound
• OPEC cuts 2025 global oil demand growth forecast, citing US tariffs
• Fed minions communicate they are a bunch of namby-pambies who don't know which way to go:
• Fed's Bostic: Bold moves 'in any direction' wouldn't be prudent
• Waller: Tariffs a major shock, with wide array of possible outcomes
• Fed's Harker does not comment on economic, monetary policy outlook
• Bigger trouble, less stimulus developing in Canada:
• Rising Canada recession risk to trigger at least two more rate cuts this year: Reuters poll
• Bank of Canada is more likely to halt interest rate cuts after tariff pause
• China cranked up exports ahead of U.S. tariffs, acting to prop up stock prices:
• China's March exports jump in temporary boost as Trump 2.0 heaps pressure
• Chinese exchanges restrict daily stock sales as trade war with US escalates, sources say
• Bigger trouble developing in Eurozone:
• As economy stalls, Germany struggles to get consumers spending
• Nasdaq, S&P, and Dow closed higher as Trump temporarily shields tech sector from tariffs
• Wall Street ends higher with Apple shares as investors assess tariff exemptions
• Apple takes top spot for first-quarter smartphone sales, data shows

Tuesday, 15 April 2025

• Signs and portents for the U.S. economy:
• Oil prices dip after IEA cuts demand growth outlook
• Oil price drop turns up heat on emerging market crude exporters
• China orders airlines to suspend Boeing jet deliveries amid trade war, Bloomberg News reports
• Trump trade war dries up sorghum sales to China but US farmers plan to plant more
• US issues export licensing requirements for Nvidia, AMD chips to China
• Bigger trouble, stimulus developing in China:
• At China's largest trade fair, exporters say US markets are 'frozen'
• Chinese exporters on Rednote ask local consumers to buy goods meant for US
• China unexpectedly anoints new trade negotiator amid US tariff war
• China's customs administration encourages companies to expand in diverse markets
• China's murky bankruptcies expose hazards for foreign investors
• BOJ minions standing by to bail out Japan's economy from tariff hits:
• BOJ's Ueda says central bank may need to respond if US tariffs hurt economy, Sankei reports
• Japan manufacturers turn cautious about business outlook due to Trump tariffs: Reuters poll
• Nasdaq, S&P, and Dow inch higher as traders continue to play 'guess-the-tariffs'

Wednesday, 16 April 2025

• Signs and portents for the U.S. economy:
• Oil up 2% to a 2-week high as new US sanctions target Iran's exports
• US Retail Sales Soared Most In 2 Years In March As Auto-Spending Spiked Ahead Of Tariffs
• US 30-year mortgage rate jumped last week to 2-month high
• US manufacturing output slows in March; tariffs cloud hangs over factories
• Chief Fed minion says Fed thinks tariffs will cause inflation, slow US economic growth, will keep Fed in wait and see mode before cutting US interest rates:
• Tariffs could create tension between Fed's dual mandate goals, Fed Chair Jerome Powell says
• Powell says Fed remains in wait-and-see mode; markets processing policy shifts
• Other Fed minions say to expect small rate cuts, but only if tariffs are kept small and not anytime soon:
• Fed's Hammack sees steady monetary policy as central bank seeks more data
• Fed's 'modestly restrictive' policy stance apt for taming inflation, Hammack says
• Fed could cut rates later this year under 'smaller tariff' scenario, Fed Governor Waller says
• Fed's Schmid says patience needed to see how tariffs play out
• Bigger trouble, stimulus developing in China:
• China's Q1 GDP grows 5.4% y/y, beating expectations
• Nasdaq slumps 3%, Dow sheds 700 points on tech rout, hawkish Powell
• Indexes drop as Fed's Powell says growth appears to be slowing; Nvidia tumbles
• Gold's lustre undimmed, prices hit records above $3,300/oz

Thursday, 17 April 2025

• Signs and portents for the U.S. economy:
• Oil set for weekly rise after new Iran sanctions
• Google holds illegal monopolies in ad tech, US judge finds
• Chief Fed minion accused of being too slow to respond to slowing US economic growth, another Fed minion says they see no reason to change monetary policy:
• Trump slams Fed Chair Powell over delay in lowering interest rates, pushes for ouster
• Trump amps up feud with Fed over rates, accuses Powell of 'playing politics'
• Trump says Fed chair Powell's termination can't 'come fast enough!'
• Trump has discussed firing Fed's Powell with Warsh, eyed as possible successor, WSJ says
• Fed's Williams sees no looming need to change monetary policy - Fox Business
• BOJ minions worried about potential impact of U.S. tariffs on Japan's economy:
• BOJ warns US tariff uncertainty may hurt confidence, economy
• ECB minions cut Eurozone interest rate for seventh time:
• ECB cuts rates again to help economy weather erratic U.S. trade policy
• ECB cuts rates as tariffs to hits already weak growth
• VIEW ECB cuts rates again to buffer economy from U.S. tariff hit
• Lagarde's statement after ECB policy meeting
• Wall Street ends mixed, closes out holiday-shortened week in the red
• S&P 500 ends up as Eli Lilly jumps and UnitedHealth plummets
• Lilly weight-loss pill works as well as Ozempic, shares surge
• UnitedHealth plunges 23% and its fall sent ripples across the ETF landscape
• Gold starts coming back to Switzerland from US after exclusion from Trump's tariffs

The raw Atlanta Fed's GDPNow tool's projection of what real GDP growth will be in 2025-Q1 improved to -2.2% from its -2.4% estimate a week earlier, which is misleading. The GDPNow tool's alternate model forecast, which corrects for the unusual surge in gold imports during the quarter that's badly skewing the GDPNow tool's raw projection, improved from an estimate of -0.3% growth to -0.1% growth. Which is to say it's predicting the U.S. economy stalled during the first quarter of 2025, but not anywhere near as badly as the raw reading indicates. On a final note, we'll observe a recession forecasting model based on the level of the Federal Funds Rate and the U.S. Treasury yield curve signaled a recession was likely to start during this period more than a year ago.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon with a Wall Street bull and a bear meeting a fortune teller".

Investors got to go on a wild roller-coaster ride of volatility during the last two weeks. The U.S. stock market has not just been swinging wildly from highs to lows during the course of daily trading.

Whether you're just an observer, an investor, or an analyst, it's certainly an exciting time. To help put today's volatility into some historical context, we've updated our long-term chart of the percentage change the S&P 500 and its aggregated market capitalization-weighted component stocks have gone through over the index' history.

Or rather, for each trading day for which we have data for the index and its predecessor indices and components from 3 January 1950 through 11 April 2025, which spans the modern era for the U.S. stock market. The chart condenses that 75 years of day-to-day trading activity into a statistical control chart-style presentation, which identifies several distinct thresholds for measuring the market's daily behavior. Here's the chart:

Over the past 18,940 trading days covered in this chart, the average day-to-day change in the S&P 500 rounds up to +0.04%. We can also see that the index has changed from its previous trading day's closing value by 0.99% (one standard deviation) or less on 79.1% of all the trading days from 3 January 1950 through 1 March 2024.

This concentration of day-to-day changes in its value that fall within one standard deviation of the mean is important. If the day-to-day variation of the index were accurately described by a normal Gaussian distribution, we would expect to see around 68.2% of all changes within that range. Instead, there are far more small changes than would be expected if that hypothesis held. At the same time, there are more "large" changes that would be expected if a normal distribution applied, which is what market analysts mean when they describe stock prices as having "fat tails".

These aspects are characteristics of a Lévy distribution, which is another class of stable distribution about a central trend. As we've discovered however, there's some overlap with a standard Gaussian distribution, which makes some of the tools used to analyze these "normal" distributions useful in analyzing daily stock price variation.

That overlap occurs at the plus-and-minus two standard deviation thresholds, which is we use to define an "interesting" day for the S&P 500. The standard deviation of the day-to-day change in the S&P 500 is just under one percent. Since 95% of these changes are within two standard deviations of the mean trend line, any change of two percent or more is relatively rare, which makes it interesting by this definition.

As the chart illustrates, these rare events are not evenly distributed. They occur in clusters with both unusually large positive changes and negative changes taking place in close proximity to each other.

That brings us to the newest volatility cluster, which got underway with President Donald Trump's announcement of global tariffs being imposed on the imports of all nations to the U.S. after the market closed on Wednesday, 2 April 2025. Starting from that date, the day-to-day percentage change in the S&P 500 index has exceeded the 2% threshold on four of seven trading days through Friday, 11 April 2025.

That's somewhat deceptive because the intraday swings from highs to lows and back again in the index during some of the days that had little overall change have been truly impressive.

Take what happened on 9 April 2025 when President Trump paused the reciprocal tariffs announced for all nations but China a week earlier. The day-to-day change was +9.52%, which now ranks as the third-highest ever daily gain for the index in the modern era. But if not for what appears to be late-day profit taking, it could have been bigger and maybe even the biggest.

The two bigger daily gains both occurred in the volatility cluster of October 2008, coinciding with the near-collapse of the U.S. auto industry and the 2008 Financial Crisis.

Which brings us to our final point. That kind of outsized daily gain typically occurs only during periods of great volatility and tends to follow substantial losses. Because it does, it qualifies as a bear market rally.

Bear market rallies tend to be temporary events. Perhaps this time is different given the artificial nature of how the latest volatility cluster began. Market history and logic argues against it.

The magnitude of the tariff event is such that we expect high volatility to continue because it exposed previously hidden weaknesses in the market that can no longer be glossed over by investors. Reckonings will now happen because they must, they can no longer be avoided. Whole new sets of winners and losers within the market will emerge because of it.

Are you ready to keep riding the roller coaster?

References

Yahoo! Finance. S&P 500 Historical Data. [Online Database]. Accessed 11 April 2025.

Volker Ziemann. Bubbles, Crashes, Fat Tails and Lévy-Stable Distributions. Physics and Finance. pp 113-143. DOI: 10.1007/978-3-030-63643-2_9. 19 January 2021.

Takumi Fukunaga and Ken Umeno. Universal Lévy’s stable law of stock market and its characterization. [ArXiv Preprint: PDF Document.] 20 February 2018.

The outlook for the S&P 500's dividends in future quarters generally trended for the worse over the past four weeks since our last snapshot was taken.

Once again, the quarter-by-quarter changes present something of a mixed picture for investors. The outlook improved by a small amount for the current quarter of 2025-Q2. The more distant future quarters of 2025-Q3 and 2025-Q4 however were decidedly negative.

Here's a quick summary of how they changed and what the expectations are as of the close of trading on Tuesday, 15 April 2025.

• 2025-Q1: Decrease of $0.01, finalizing at $20.33 per share
• 2025-Q2: Increase of $0.20, rising to $19.05 per share
• 2025-Q3: Decrease of $0.19 to $18.96 per share
• 2025-Q4: Decrease of $0.76 to $18.84 per share

Since these are snapshots, they don't quite capture the magnitude of how much the S&P 500's dividend outlook has been changing over this period, particularly in the period since 2 April 2025. For example, from 14 March 2025 up to that date, the dividend outlook for 2025-Q4 had held within a relatively narrow range between $19.50 per share and $19.65 per share. From 3 April 2025 through 15 April 2025, the amount of dividends expected to be paid out in the final quarter of 2025 has ranged between $18.00 and $19.63. Dividend futures for 2025-Q4 have been rebounding since hitting that low of $18.00 on 7 April 2025.

The following animated chart shows how expectations for the S&P 500's quarterly dividends per share changed in the month from 14 March 2025 to 15 April 2025. If you're reading this article on a site that republishes our RSS news feed, you may need to click through to our site to see the animation.

How changes in the outlook for dividends at specific points of time in the future contribute to changes in stock prices is described by this math.

More About Dividend Futures Data

For this series, we have been taking a snapshot of the CME Group's S&P 500 quarterly dividend futures data shortly after the second or third week of each month.

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarter's dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the now "current" quarter of 2025-Q2 began on Saturday, 22 March 2025 and will end on Friday, 20 June 2025.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor. S&P reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Dividends' written above it, which we added.