The non-profitable tech stocks (as well as other retail favorites) were the poster children of the liquidity bubble in 2021, and until recently have been languishing near the bottom after being cut in half during the tight money rate reset of 2022. But they are trying to come back from the dead, finding their mojo along with the tech sector and crypto.

The Mag 7 continues to dominate and are back at their all-time high. As the chart shows below, the relative performance line (blue) is almost identical to the absolute price index, which tells us that “as goes the Mag 7, so goes the S&P 500.” The bottom panel shows the trailing EPS and its payout (dividends plus buybacks). With a payout ratio of 56%, the Mag 7 is actually below the S&P 500 index (which is around 70%), but the growth rate of that payout has been formidable (72% since 2023).

Bitcoin reached yet another new all-time high, and has continued to follow its 4-year cycle very closely.

The performance leaderboard continues to be dominated by bitcoin and the Mag 7, with Treasuries and the dollar at the bottom. It’s so 2025.

While the year-over-year growth rate in trailing earnings seems to have peaked at 10%, margins continue to move higher and are now 13.1% (for the MSCI US index). It’s an impressive performance several months into a new tariff regime, and it goes a long way to explain why valuations have rebounded so swiftly.

Earnings season is now underway, and with 58 companies reporting, 86% are beating estimates by an average 782 bps. The expected growth rate for Q2 earnings has already bounced from 2.5% to 3.3%, and more is likely in the coming few weeks.

Following a 500 bps markdown in the expected growth rate for 2025, earnings are holding up well, and are now being amplified by valuations. For the S&P 500, the trailing P/E-multiple is up 6% year-over-year, while earnings are up 8% and the dividend yield is 1.3%. Add them all up and you get a generous 15% return.

Following the back-and-forth lurch in April, the market has quieted down, with its 4-week rate of change squarely in the middle of the bell curve.

Following the back-and-forth lurch in April, the market has quieted down, with its 4-week rate of change squarely in the middle of the bell curve.

The S&P 500 index continues to recover from its April swoon along the lines of the 1998 LTCM bottom and 2018 Powell Pivot bottom. If those analogs hold, we should continue to see more gains in the months ahead, with the caveat that the year’s worst seasonal period lies straight ahead of us. However, seasonal patterns tend to work “all else being equal,” and if there is one thing we know in 2025, it’s that nothing else is equal.