When Will the Stock Market Recover?

The recent plunge of stock prices on US exchanges has wiped out trillions of dollars of value gained in the last year. Prices were back to levels of April of 2024 and could fall further.

Many were asking, when will the stock market recover. And this afternoon, we got a surprise announcement by Trump, that the reciprocal tariffs would be delayed for 3 months. But not for China, who were hit with a 125% tariff after announcing their tariff increase on the US.

Trump said the timing of the tariff announcement was a coincidence and that they had been considering it. The market did recover slightly today with a massive jump for each index. The Russell small caps didn’t fare as well and in tonights futures, it is down.  The NASDAQ tech stocks rocketed 12% on average with big rises for NVDA and PLTR. See more on today’s stock market report.

The tariffs are a tough pill to swallow and are exposing a lot of the pretense of many governments across the world about how global trade is funded. What’s always been hidden is how the USA funds other nations.  Trump’s tariff recession will make that plain and undeniably clear. So when you might ask, “did Trump mean to cause a recession or the stock market to crash?” I think you might know the answer. Sometimes, actions speak louder than words and make it so clear, the media can’t hide it.

Finding Great Sectors and Stocks to Buy

Like most avid and hopeful investors you’re already looking ahead for the return of stock prices and want to know when the markets will rebound.  Honestly, there are no experts who can answer that question. The major hedge fund, economists and banks haven’t issued their recovery predictions.  You have to keep in mind that their predictions are made with their own investors in mind.  If they publicize bad predictions, they stand to lose investors and investments. And even political affiliations will skew published predictions.

Major economists didn’t foresee a 2025 recession, nor acknowledge a better country under Trump, so you can’t expect them to forward a well-reasoned estimate of this coming recovery. You have to think it through yourself.

Is there a Market Recovery Timeline?

The influences on the recovery timeline include Trump’s decisions, Democrat interference, fiscal deficits, economic damage, consumer sentiment, and global leader responses. Some leaders are raising their tariffs (Europe, China), while others are willing to negotiate with the Trump team.  However, Trump has stated firm guidelines for any new trade deals to ensure non-tariff illwill is completely eradicated. That will be a tough sell in these countries who are dead set against US exports.

With AI dominance, cheap energy, massive direct foreign investment, and reindustrialization, the US is assured of a strong recovery.  For your stock buying strategy, the bottom of the market will likely come in the next 3 months, with the worst over by the fall, assuming the war of words and tariff hikes quietens down. You’ll want to dig into the US stocks and sectors with the best potential.

Will it Be a V-Shaped Recovery?

Yet, plenty have predicted this recovery will be a v-shaped one with a sharp rebound.

Given the application of the tariffs and the depressing effect on the economy, a v-shaped recovery isn’t likely. A V-shaped recovery is a quick and sustained recovery after a sharp economic decline.  The stock market is a separate process that precedes an economic recovery, and offers you the opportunity to launch a new business or buy the best stocks at low prices for the long ride back. If the stock market has lost 20%, then investors would enjoy a potential gain of perhaps 22% on the other side with perhaps a 20% upside by 2026.

Some are pondering a J-shaped recovery model too, where this big downturn converts into a massive new bull market well beyond the last one. Because, we’re referring to US stock markets, not the globe. It will the US that taps US consumers, while being protected from the tariffs.

Timing the Recovery

Predicting the full recovery timeline allows corporations and investors to time their spending. Given the US is in the driver’s seat and that the US consumer will drive the revival, the recovery likely will be faster than some market bears expect.

When the tariff-based transition is fully played out, it will be the US to recover first. The US could gain $1.2 trillion while the rest of the world will lose that amount, but this is just a portion of the growth Trump plans to generate through reindustrialization.  The height of that comeback depends on a lot of factors including political policy wars and the ability of the government to stimulate and offer tax breaks.  Inflation and interest rates could play a role as the new US economy heats up putting a strain on supply.

History isn’t much help in helping us answer the recovery question. Typically it takes a few months to several years to recover. It took 3 or 4 years for the economy and stock markets to get over the great financial crisis.

The Timeline of the 2007-2009 Financial Crisis Recession

Let’s go back to 2007, a terrible time for myself, as that recession took a long time to evolve and even longer to recover from. It was devastating. Some say it can’t happen again because the banks are strong this time and consumers are strong, and there is plenty of money in money markets.

Follow through a recall of the timeline of the events in the 2007–2009 Financial Crisis (also known as the Global Financial Crisis, or GFC).  It unfolded in stages, from the initial housing market collapse to a full-blown recession and stock market crash.

Pre-Crisis Buildup (2004–2006)

• 2004–2006: The U.S. housing market booms, fueled by subprime mortgage lending (loans to borrowers with poor credit).
• Mid-2006: Home prices peak (Case-Shiller Index, July 2006), then begin declining as interest rates rise.

Phase 1: The Housing Crash Begins (2007)

• February 2007: Subprime lenders (e.g., New Century Financial) start collapsing due to rising defaults.
• June 2007: Bear Stearns halts redemptions from two hedge funds heavily invested in mortgage-backed securities (MBS).
• August 2007: Full-blown credit crunch begins—banks stop trusting each other’s loans.
• September 2007: Fed cuts rates for the first time (from 5.25% to 4.75%) to ease the crisis.

Phase 2: Financial System Collapse (2008)

• March 2008: Bear Stearns collapses and is sold to JPMorgan Chase with Fed backing.
• September 2008: Lehman Brothers files for bankruptcy (Sept. 15)—the largest bankruptcy in U.S. history.
  • AIG (insurer of toxic assets) is bailed out for $85B (Sept. 16).
  • Merrill Lynch sold to Bank of America (Sept. 14).
  • Washington Mutual fails (largest U.S. bank failure).
• October 2008: Congress passes TARP ($700B bailout fund) to stabilize banks.
• November 2008: Fed launches quantitative easing (QE1)—buying mortgage bonds to inject liquidity.

Phase 3: Recession & Market Bottom (2008–2009)

• December 2008: The Great Recession is officially declared (began Dec. 2007).
• March 2009: Stock market bottoms (S&P 500 hits 666, down ~57% from 2007 peak).
• Unemployment peaks at 10% (Oct. 2009).

Recovery Phase (2009–2013)

• March 2009: Markets begin recovering as Fed’s QE and stimulus take effect.
• June 2009: Recession officially ends (but recovery is slow).
• 2010–2012: Eurozone debt crisis slows global recovery.
• 2013: S&P 500 finally surpasses pre-crisis highs (March 2013).

Key Lessons for the 2025 Recession (if it happens)

• The 2008 crisis saw a ~50% market drop over 17 months, with a 4.5-year recovery to new highs.
• Government intervention (TARP, QE) was critical in stabilizing markets.
• Unemployment took ~6 years to return to pre-crisis levels.

International Trade is Declining: Globalism is Dying

This 2025 recession is looking more likely, especially as President Trump said “sometimes you need to take medicine to get better.”

But afterward, likely in 2026, the US will have a big added benefit – the reduction of a $1.2 trillion annual trade deficit. That’s $1.2 trillion kept in the economy each year forward.  And that to the Trillions of direct investments happening which will spawn huge productivity gains. US GDP could increase remarkably.  And with his production repatriation and reindustrialization project underway, the US jobs outlook is better than any nation. These are jobs that disappeared decades ago.

Optimistic GDP Growth Projections in a Trump-Powered Recovery (2025–2029)

Under a best-case scenario, GDP growth could average 2.5–3.5% annually, compared to the ~2% long-term trend. Don’t be surprised if this very understated, given the magnitude of the US reindustrialization which is a complete unwind of the China miracle.  The incredible 5+% growth that powered China’s transformation will now be happening to the US.

For growth in stock prices, read the S&P 500 analyst forecast along with the forecast for the US stock market.

But regaining lost GDP, retraining workers, and funding regrowth is a question mark.   The stock market recovery is in part determined by how fast US companies can replace foreign imports (e.g., vehicles manufactured in Mexico, Europe and Canada). It can take years to build factories, so the President must encourage companies to build fast. Otherwise the recovery could take a long time.

Let’s hope the J-shaped recovery happens, and North American trade will be rekindled.