Why History Says the US Equities May Just Be Getting Started in 2025
The market is calm — for now. But is that a sign of strength or the eye of the storm?
After a turbulent first half of 2025, U.S. equities have surged to record highs. While the calm may feel like a relief, history suggests it might not last — and that’s not necessarily bad news.
In this post, we break down decades of historical data on market volatility (VIX) and equity performance to answer a critical question:
What can we expect from the US Equities (S&P 500) from here until year-end?
Understanding the VIX: A Market Barometer
The CBOE Volatility Index (VIX), often dubbed the “Fear Gauge”, tracks market expectations of volatility. Generally:
- High VIX = fear, uncertainty, falling equities
- Low VIX = calm, rising equities
By analyzing when the VIX tends to peak (max fear) or trough (max calm) during a typical year, we can uncover powerful seasonal clues.
VIX Peaks & Troughs (1990–2024):
- Most VIX Peaks:
➤ January (6x), August (6x), October (5x) - Most VIX Troughs:
➤ December (9x), January (7x), July (6x) - Never Troughed in September
Key Insight: While July is historically quiet, August and October often bring volatility spikes. That could mean short-term choppiness for equities is still ahead.
Where Are We Now in 2025?
Let’s zoom into this year.
- YTD VIX Low: 14.77 (Feb 14)
- Current VIX: 16.65
- YTD VIX High: 52.3 (early April – trade shock)
Three critical points:
- February has never been the VIX’s annual low month, suggesting volatility could fall further later this year — typically in November or December.
- The April VIX spike was a 4-sigma event — rare and likely the high for the year.
- Historically, when VIX peaks in April (like in 1994, 2000, 2005), S&P returns varied but trended positively unless disrupted by major shocks.
Implication: Unless another shock hits, U.S. equities could grind higher into year-end, especially if VIX fades into its usual Q4 lows.
Even When VIX Peaks Late, Stocks Don’t Collapse
Let’s test the idea that rising volatility (like in August or October) kills returns. Spoiler: it doesn’t.
When VIX Peaked in August (6 times):
- S&P 500 had positive annual returns in 4 of 6 years
- Average return: +4.2%
- Bad years? 1990 (Gulf crisis), 2002 (recession).
- Great years? 2017 (+21.6%), 2024 (+24.9%)
When VIX Peaked in October (5 times):
- S&P was positive every time
- Average return: +23.9%
Conclusion: Even with late-year volatility, the S&P usually finishes strong — unless derailed by war or recession.
Seasonal S&P Highs: Q4 Dominance
The S&P 500 has shown a strong tendency to peak in the final quarter of the year. Here’s what the data from 1980–2024 says:
Month of Yearly Peak (45 years):
- Q4 (Oct–Dec): 32 times (71%)
- December alone: 24 times (53%)
- July: Only once — in 1990 (due to Iraq invasion of Kuwait)
When S&P Peaked in Q4:
- Return was positive 100% of the time
- Average total return: +22%
- 88% of those years had double-digit gains
Message: If 2025 follows historical norms, the market hasn’t topped yet — and there’s room for strong gains from here.
Final Takeaways:
- We’re exiting one of the calmest months (July), but August and October may bring bumps.
- However, volatility spikes haven’t derailed full-year gains in most past cycles.
- The VIX has likely not troughed yet — and volatility bottoms tend to accompany bull runs.
- Q4 remains the market’s favorite season for peaking, and with only a +7.2% YTD return as of now, there’s room to run.
