Stocks Recover Their 2025 Losses

The S&P 500 hasn’t achieved new all-time highs in 2025 yet, but it did regain all of its year-to-date losses earlier this week. It’s a startling feat after an equally startling stock-market correction that bottomed out in April.

What sealed the deal for stock-market bulls was the news that the U.S. and China paused most tariffs for 90 days. Additionally, President Donald Trump announced that India has offered to drop its tariffs on U.S. goods.

Consequently, the S&P 500 has made a round trip from 5,900 at the beginning of the year to roughly 5,000 and then back to 5,900. Similarly, Bitcoin recently reclaimed the crucial $100,000 level.

Interestingly, government bond yields are also up now. Specifically, the 10-year U.S. Treasury bond yield is back up to 4.5%.

It’s strange to see risk-on assets like the S&P 500 and Bitcoin rebounding while bond yields are also up. These are mixed signals from a financial market that’s relieved about the latest trade talks but simultaneously anxious about the near future.

Courtesy: Holger Zschaepitz

For what it’s worth, Holger Zschaepitz observed that the last time the 10-year Treasury bond yield reached 4.5%, President Trump rolled back his tariffs. Are more rollbacks in the cards now, or are the latest talks with China the last overture for a while?

We’ll just have to wait and see what happens. For now, at least the market can breathe a sigh of relief as earnings season is mostly in the rear-view mirror and there weren’t many disasters.

But then, that’s a lagging indicator reflecting corporate earnings from this year’s first quarter. Bigger tests will come when S&P 500 companies have to report their financials for the second quarter.

So, really it’s too soon for index fund holders to breathe a sigh of relief. Sure, there’s a thawing of U.S.-China relations, but it’s hard to know how long this will last.

Meanwhile, even as the S&P 500 claws back its year-so-far losses, Americans living in the real world continue to struggle. Across the major categories of U.S. consumer debt, “serious” delinquencies of 90 days or more are on the rise.

Courtesy: Global Markets Investor

The serious loan delinquency rates are 5% for auto loans, 8% for student loans, and 12% for credit card debt. These are conditions you would expect to see when there’s a real crisis on Main Street, even if this isn’t fully reflected on Wall Street.

All of this will leave retail investors in a state of confusion, especially if they’re over-reliant on index funds that track the S&P 500. If the American consumer is struggling so badly, can corporate earnings continue to hold up in the second quarter?

My response to this is that investors don’t have to rely on index funds too much. Learning the science of stock picking, coupled with diversification into precious metals and other non-correlated assets, is a perfectly viable alternative to indexing.

With that approach, you won’t have to worry too much about the S&P 500 falling back after it just regained its losses. It’s hard to be nimble when your wealth is entirely in the hands of index fund managers; when you take control of your own finances, broad-market problems can be your best opportunities.