Can anything stop the stock market? The U.S. economy recently weathered the worst pandemic in 100 years, the worst inflation in 40 years, and the highest interest rates in 20 years. Yet from 2019 through 2024, the S&P 500 grew by an average of nearly 20 percent a year, about double its historical average rate. Despite President Donald Trump’s erratic economic policies, which include the highest tariffs since the 19th century, the market is already up by about 8 percent in 2025.
As the stock market soars ever higher, the theories of why it rises have suffered the opposite fate. One by one, every favored explanation of what could be going on has been undermined by world events. The uncomfortable fact about the historic stock-market run is that no one really knows why it’s happening—or what could bring it to an end.
-Rogé Karma, staff writer at The Atlantic.
Monday, Aug. 11, 2025
S&P 500: +8.6% year-to-date.
Nasdaq Composite: +11.1% year-to-date (new all-time high).
Dow Jones Industrial Average: +4.8% year-to-date.
We do know that the US stock market is overvalued— but by how much?
Rogé Karma closes out his excellent article by noting that the explosion of passive funds* over the past 15 years could explain why the market has become less sensitive to real-world shocks and headwinds.
It might keep going up, or something unforeseen may bring it down dramatically.
*A passive fund is an investment fund, like an exchange-traded fund (ETF) or index fund, that aims to match the performance of a specific market index, rather than trying to outperform it.