During the last trading session of an exciting 2025 that saw the Nasdaq grow more than 20% for the third consecutive year and the S&P 500 secure a third consecutive double-digit gain, stocks witnessed a modest decline.
The tech-heavy Nasdaq Composite (IXIC), the Dow Jones Industrial Average (DJI), and the S&P 500 (GSPC) all saw losses of about 0.7% on Wednesday, reducing expectations of a Santa Claus rebound.
The benchmark S&P 500 increased by more than 16% for the year, its sixth consecutive year of gains of at least 15% over the previous seven.
The blue-chip Dow gained over 13%, while the Nasdaq Composite followed suit with a 20% increase. This year's gains over AI optimism were driven by tech (XLK) and consumer discretionary (XLY) firms.
With a 65% increase in 2025, tech behemoth Alphabet (GOOG) (GOOGL) beat the "Magnificent 7" group. Nvidia (NVDA), a major player in AI chips, came in second with a 39% increase.
After reaching a record high, Bitcoin (BTC-USD) dropped more than 30%. It was the best year for gold (GC=F) since 1979. Silver's price (SI=F) more than doubled.
A little more than eight months ago, the Nasdaq temporarily entered a bear market, and the S&P was on the verge of one following President Trump's imposition of his most comprehensive tariffs in April, which he later completely reversed.
Despite hiccups due to worries about those tariffs, geopolitical events, the state of the US economy, and possibly most importantly rising AI-fueled valuations, Wall Street didn't turn around after that.
More optimism is needed for 2026. For the fourth year in a row, every Wall Street forecaster that Bloomberg tracks believes that stocks will rise. However, there are still several risks: the US president is still a wild card, the AI boom could stall, and the economy could surprise.
The divisions that have plagued the Federal Reserve since 2025 are probably going to persist, and Jerome Powell will be replaced by a new chair by the middle of the year.
As a result, the Federal Reserve's interest rate path is also in focus for the upcoming year. The central bank's December meeting minutes, which were made public on Tuesday, revealed that this month's decision was a tight call and that many officials believed there might be "some time" before another rate cut.
In total, 85% of wagers for the meeting in January are on the Fed maintaining its present levels. The stock market will resume on Friday after being closed on Thursday, January 1. Cheers to the New Year!
