Where Data Tells the Story
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Since the mid-2010s, the S&P 500 index and the U.S. M2 money supply generally moved in tandem, reflecting a strong relationship between monetary expansion and stock market growth. However, after 2023, the S&P 500 surged sharply even as the M2 money supply contracted.
This divergence indicates factors beyond monetary supply, such as the rapid rise of AI-driven stocks, shifting investor sentiment, and speculative activities, played a significant role. While monetary expansion has historically influenced the stock market, this trend underscores the increasing complexity of market dynamics and the broader influences shaping equity prices.