If you’ve looked at a stock market last 6 months graph recently, you probably noticed it looks less like a steady climb and more like a rugged mountain range. Honestly, the volatility we’ve seen since July 2025 has been enough to give even seasoned day traders a bit of whiplash. We’ve had a government shutdown, a "jobless profit boom," and a tech sector that suddenly feels like it’s running out of steam.
Basically, the "everything rally" of early 2025 hit a wall of reality.
The July to January Rollercoaster
Let’s talk numbers. Back in late July 2025, the S&P 500 was sitting around 6,358. As of mid-January 2026, we’ve pushed past 6,940. On paper, that’s a solid 9% gain. But looking at the line on the graph tells a much messier story.
October was particularly weird. Stocks actually rose for a sixth consecutive month, which felt great until the U.S. Senate failed to pass funding bills. Then came the 43-day government shutdown. It didn't just stop national park tours; it stopped the flow of economic data. For weeks, investors were essentially flying blind without official retail or housing reports.
When the smoke cleared in November, the market didn't just recover—it rotated.
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The Great Sector Flip
For years, everyone told you to just buy the "Magnificent Seven" and go play golf. That strategy started showing cracks lately. In the final quarter of 2025, Health Care was the surprise heavyweight champion, surging over 11%. Meanwhile, the tech sector—the former darling of the AI boom—barely kept its head above water with a 2.14% gain.
Why the shift? It’s kinda simple. Investors are getting tired of paying huge premiums for AI "potential" and are looking for actual, realized profits.
- Financials: Rose about 1.65% in Q4 2025, despite some drama around proposed credit card interest rate caps.
- Utilities and Real Estate: These were the big losers, dropping 2.32% and 4.23% respectively as interest rates stayed higher for longer than people hoped.
- Small Caps: In a weird "David vs. Goliath" moment, small-cap companies have started outperforming the giants in early 2026, gaining over 5% YTD while the S&P 500 large caps lagged at 1.4%.
The Fed’s Balancing Act
You can't talk about the stock market last 6 months graph without mentioning Jerome Powell and the crew at the Fed. They’ve been in a tough spot. Inflation stayed sticky because of the tariffs announced in April 2025, yet the labor market started to cool.
The Fed cut rates three times in late 2025—September, October, and December—bringing the target range to 3.50% – 3.75%.
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Interestingly, these weren't unanimous decisions. The December meeting had three dissenting votes. Some officials wanted deeper cuts to save jobs, while others were terrified that cutting too fast would make inflation roar back. This internal friction is exactly why the graph looks so jagged; the market hates a divided Fed.
The "Jobless Profit" Phenomenon
Here is the part that nobody talks about enough. Companies are making record profits, but they aren't hiring. The Bureau of Labor Statistics recently confirmed that U.S. employers added only about 473,000 jobs throughout most of 2025. That is the slowest pace since 2003 (outside of a recession).
Productivity is up—likely thanks to the very AI tools everyone is investing in—but the human cost is starting to show. Goldman Sachs' chief economist, Jan Hatzius, pointed out a particularly grim stat: unemployment for college graduates aged 20-24 has climbed to 8.5%.
What the Graph is Telling Us for 2026
If you zoom out, the 6-month trend is still technically a bull market. But it’s a nervous one. We just saw the Dow and S&P 500 hit record highs in the first week of January 2026, but the momentum was immediately checked by new tariff threats against European countries.
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Specifically, the threat of 10% tariffs on countries like Germany and the UK has investors worried about a renewed trade war. We’re already seeing futures slide.
Actionable Strategy for the Next Quarter
Don't just stare at the 6-month graph and hope for the best. The market is changing its "DNA" right now.
- Stop Chasing the AI Hype Alone: The "AI supercycle" is still a thing, but the easy money has been made. Look for companies using AI to cut costs and boost margins, rather than just companies selling AI chips.
- Watch the Yield Curve: With the 10-year Treasury yield hovering around 4.23%, the bond market is still skeptical about a "soft landing." If you see the yield spike toward 4.5%, expect a sell-off in growth stocks.
- Diversify into Real Assets: Gold and basic materials have been "outstanding" performers recently. Gold futures recently advanced to $4,515 an ounce. If the trade war talk intensifies, these safe havens will likely see more inflows.
- Mind the Small Caps: The rotation is real. If the "One Big Beautiful Bill Act" continues to support domestic manufacturing, small and mid-cap companies might finally have their year.
The last six months proved that the market can handle a government shutdown and a cooling labor market as long as corporate earnings stay high. However, with new tariffs on the horizon and a new Fed Chair nomination looming in May, the next six months are going to require a much more tactical approach than just "buying the dip."
Keep an eye on the January 28 Fed meeting. That’s going to be the first real signal of whether we’re heading for a "pause" or if the rate-cutting cycle still has legs. For now, the trend is up, but keep your seatbelt fastened.
Next Steps for Portfolio Health:
Review your exposure to the "Magnificent Seven" tech stocks. If they make up more than 20% of your total portfolio, consider rebalancing into cyclical sectors like Industrials or Materials, which have shown stronger resilience during the recent volatility. Ensure you have a cash reserve of at least 5-10% to take advantage of the inevitable tariff-related dips in late Q1.