Believe it or not, the S&P 500 (Index: SPX) has mostly behaved in an orderly manner since the end of 2023.
Mostly. The index experienced a brief outbreak of chaos during 2025, which proved to be little more than an outlier in a longer period of order. That brief outbreak coincided with two major market events:
- The brief 622 point deflation of the AI bubble between 19 February 2025 and 13 March 2025 after the reveal of China's DeepSeek AI system "broke" what had been a virtual AI monopoly by U.S. firms.
- The market's reaction to President Trump's 2 April 2025 "Liberation Day" tariffs, which prompted the index to plunge by 688 points through 8 April 2025.
Altogether, these two events caused the S&P 500 to drop by 1,161.38 points between 19 February 2025 and 8 April 2025. And had the market chaos unleashed by them continued, the period of order in the stock market that began after 29 December 2023 would have quickly come to a definitive end.
Except it didn't. Stock prices rebounded so quickly that the plunge became little more than the equivalent of a statistical outlier. The following chart mapping the relationship between the value of the S&P 500 and the index' underlying trailing year dividends per share illustrates that remarkable development.
Two things combined to preserve order in the U.S. stock market. First, the Trump administration quickly adapted its global tariff policies to reduce their damaging potential. Second, the AI bubble reflated, as the valuations of firms involved in the technology behind artificial intelligence systems recovered and then reached even higher highs.
Through 14 October 2025, we find the recent drop in stock prices associated with the reignition of the U.S.-China tariff war following China's provocative attempt to assert monopoly status over rare earth material processing and the Trump administration's reaction to it would have to become much deeper to break the established period of order in the market. In the short term, the index' 20-day moving average would need to drop below about $5,500 by the end of 2025 to qualify as a definitive breakdown of order in the U.S. stock market.
Given that the S&P 500 just recorded an all time high of 6,753.72 on 8 October 2025, we'll observe that if such a breakdown in order occurs within this timeframe, there will be no mistaking it for what it is.
Image Credit: Microsoft Copilot Designer. Prompt: "Conceptual art of the S&P 500 quickly moving from a period of order to chaos and back again".
Labels: chaos, data visualization, ideas, SP 500
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