The Stock Market Just Did Something for the 6th Time in 75 Years. History Says It Signals a Big Move in the Second Half of 2025.

The S&P 500 (^GSPC) boomeranged in the first half of 2025. The index had declined 19% by April 8 as President Trump announced a wave of surprisingly severe tariffs that many economists warned could cause a recession. But stocks promptly rallied when Trump announced a 90-day pause on reciprocal tariffs

In fact, the S&P 500 advanced 20.5% in the two months following April 8. The index has only returned more than 20% during a two-month period on five other occasions in the last 75 years, and those incidents have always preceded monster gains during the next six months and one year.

History says the stock market will soar in the second half of 2025

The S&P 500 is considered the best gauge for the overall U.S. stock market. The index was not created until March 1957, but the selection methodology can be applied in retrospect to generate hypothetical back-tested values.

Carson Investment Research arrived at this conclusion after reviewing data from the previous 75 years: The S&P 500 has only returned more than 20% in two months on six occasions since 1950, and the most recent one was this year. The S&P 500 climbed 20.5% during the two-month period that ended on June 9, 2025.

That may seem insignificant or arbitrary. But that type of momentum has always led to more upside in the near term. The following chart illustrates that point. It shows every time the S&P 500 achieved a two-month return above 20% since 1950, and it shows how the index performed afterward.

Data sources: YCharts, Carson Investment Research.

As shown, after a two-month gain exceeding 20%, the S&P 500 has always increased during the next six months and the next year. Moreover, the index has returned an average of 16% in the next six months and 31% in the next year. We can use those numbers to guess about what comes next for the stock market.

The S&P 500 closed at 6,006 on June 9. It will increase 16% to 6,967 in the remaining months of 2025 if its performance matches the historical average. That implies 11% upside from its current level of 6,279.

Likewise, the S&P 500 will climb 31% to 7,868 by June 9, 2026, if its performance aligns with the historical average. That implies 25% upside from its current level. But past results are never a guarantee of future returns.

President Trump’s tariffs still pose a threat to the U.S. stock market

President Trump shocked Wall Street April with his “Liberation Day” tariffs, which included a 10% baseline tax on all imported goods and country-specific reciprocal tariffs that were much more severe in most cases. He paused the reciprocal tariffs on April 9, the day they were scheduled to take effect.

The pause was initially scheduled to end of July 9, but the Trump administration recently rolled the deadline to Aug. 1. However, the tariffs imposed to date have still increased the average tax on U.S. imports to its highest level since 1936, according to the Yale Budget Lab. Most economists expect those taxes to raise consumer prices and slow economic growth.

For instance, Morgan Stanley economists initially estimated U.S. gross domestic product (GDP) would grow 2.1% in 2025 and 1.6% in 2026. But they lowered their outlook because of tariffs, such that their forecast now calls for U.S. GDP to increase 1.5% in 2025, followed by 1% in 2026.

Morgan Stanley economists also expect inflation to reaccelerate, potentially reaching 3.5% in the third quarter as companies pass some tariff-related costs to consumers. For context, inflation measured 2.4% in May. A meaningful uptick in consumer prices would probably cause the stock market to fall, especially in the context of slower economic growth, a situation known as stagflation.

Here’s the bottom line: History says the S&P 500 could score huge gains in the remaining months of 2025, but tariffs are a source of great uncertainty. Duties imposed to date have yet to materially weaken the economy, but that’s probably because companies stockpiled inventory beforehand. Also, if the U.S. fails to reach trade deals with key partners, goods from several countries could face much higher tariffs come Aug. 1.

Some analysts think the stock market has priced in no substantial increase in the average tariff rate, which implies little chance of upside and plenty of risk to downside in the near term. Put differently, the stock market may not move much even if the U.S. strikes dozens of trade deals, but stocks could fall sharply if those deals fail to materialize and reciprocal tariffs come back in force.