May 19, 2025
Serious damage has been done to markets. The S&P 500 fell 21% by mid-April from its all-time high. Similarly, the Invesco QQQ Trust exchange-traded fund, which tracks big technology companies, has plunged 26%.
Both major indices are now well below their 200-day moving averages. Often it takes months to repair damage like this, but not always.
After the 2020 pandemic crash, U.S. stocks bottomed. Then the S&P 500 experienced a swift, powerful rally that reclaimed all-time highs in just five months. Ultimately, the index went on to surge 119% before topping out.
There’s a chance that could happen again, but I wouldn’t count on it.
Remember, the Federal Reserve’s response to COVID? It unleashed the firehose, slashing interest rates, pumping liquidity into the global financial system, and printing more than $3 trillion.
But there’s no reason to think that will happen again.
Last month, Fed Chair Jerome Powell gave a speech at the Economic Club of Chicago. He explained how the economy was strong but slowing. He warned that tariffs could raise prices and slow growth. And finally, he added that the Fed is in no rush to lower interest rates.
Basically, the Fed Chair told the world the central bank isn’t rescuing markets. So, I wouldn’t expect a V-shaped bottom for the stock market.