The S&P 500 has risen just over 17% this year.
The U.S. stock market is on the verge of a remarkably rare achievement: logging a third consecutive year of double-digit gains, a feat that has occurred only five times since the 1940s. The S&P 500 is set to finish 2025 with a 17% gain, following increases of 23% in 2024 and 24% in 2023. This impressive performance came despite a year filled with concerns over tariff policies, geopolitical turmoil, asset bubble risks, and the longest government shutdown in U.S. history. Sam Stovall, chief investment strategist at CFRA Research, noted that it is exceedingly rare for the S&P 500 to post three consecutive years of gains with an average annual increase exceeding 10%, having happened only five times prior to this year; two of those instances extended to four-year streaks, with a five-year run recorded during the 1990s. The market's advance in 2025 was primarily fueled by robust corporate earnings, a wave of enthusiasm for artificial intelligence, and investor optimism regarding anticipated interest rate cuts from the Federal Reserve. "U.S. equities are finishing the year with strong momentum, positioning the S&P 500 for a third straight year of double-digit returns," wrote Craig Johnson, chief market technician at Piper Sandler, in a research note. "Powerful momentum in the AI sector, combined with the resilience of the U.S. economy in weathering fiscal and political headwinds, has been the primary driver of this trend."
The year was marked by significant volatility, with the market navigating numerous challenges to ultimately achieve strong results. The S&P 500 began the year continuing its strongest two-year rally since the 1990s. As Donald Trump prepared to take office, Wall Street maintained a cautiously optimistic outlook for further gains. In late January, a sell-off hit U.S. stocks after Chinese tech startup DeepSeek released an AI chatbot, sparking fears that Silicon Valley was channeling excessive, unnecessary capital into AI companies. However, the market soon regained its footing, with investors growing increasingly confident that American firms would prevail in the race for superior AI technology—this theme propelled the market higher throughout the year, even amidst persistent concerns about an AI bubble. During the spring, the market experienced a historic bout of volatility after Trump introduced so-called "Tariff Liberation Day," imposing new import tariffs on numerous countries and vowing to upend the global trade system. But after Trump delayed the implementation of most tariffs, stocks staged a powerful rebound, reaching new all-time highs in June, surpassing levels last seen in February. From that point, supported by strong corporate profits and the Fed's rate cuts, the market trended broadly higher; the lower interest rates made stocks more attractive relative to bonds and provided a tailwind for rising share prices. The Dow Jones Industrial Average finished the year with a gain of 13.7%. This blue-chip index started the year around 43,000, plunged below 37,000 in April, then rebounded after Trump postponed the tariffs; it broke above 45,000 to set a new record in August, and subsequently surged past the 46,000, 47,000, and 48,000 marks, conquering some of these milestones in a matter of weeks.
Artificial intelligence was the dominant theme of 2025 for U.S. stocks, which is why the tech-heavy Nasdaq Composite Index led the three major indexes with a 21% gain for the year, topping the performance charts for the third consecutive year. Since the launch of OpenAI's first ChatGPT product in October 2022 ignited the AI bull market, technology and AI-related stocks have consistently driven the market higher. The year 2025 witnessed multiple episodes of extreme market turbulence: the CBOE Volatility Index (VIX), a gauge of Wall Street's fear, surged in April to its highest level since the COVID-19 pandemic; it spiked again in June amid tensions between Israel and Iran, though market volatility subsequently subsided and stabilized.
In the bond market, U.S. Treasuries, which influence borrowing costs across the economy, stabilized overall for the year after experiencing sharp swings in the spring due to Trump's tariff policies. The yield on the 10-year U.S. Treasury note began the year at 4.57% and ended at 4.12%, helping to keep U.S. mortgage rates relatively low throughout 2025. Bond yields move inversely to prices. As investors grew accustomed to expectations of Fed rate cuts and the U.S. labor market showed signs of weakening, the price of the 10-year note rose, pushing its yield lower. Conversely, the yield on the 30-year U.S. Treasury bond started the year at 4.79% and ended slightly higher at 4.8%. Persistent concerns about sticky inflation contributed to the modest rise in the long-bond yield by year-end.
The U.S. dollar weakened against other major currencies in 2025, with the decline in its exchange rate standing out as one of the year's most distinctive market features. The U.S. Dollar Index, which measures the currency against a basket of six major peers, fell 9.5% for the year, marking its worst annual performance since 2017. A combination of perceived erosion of the Federal Reserve's independence, the implementation of interest rate cuts by the central bank, and uncertainty surrounding U.S. policy decisions and tariff measures contributed to the dollar's weakness.
Gold and silver led the precious metals complex, posting their largest annual gains in decades. Gold futures in New York skyrocketed 66% for the year, their best annual performance since 1979. Starting the year around $2,640 per troy ounce, gold surged to a record high above $4,500 in December before moderating slightly to trade around $4,355 per ounce by year-end. Gold is widely considered a safe-haven investment, with investors believing it can preserve value during crises, periods of high inflation, or when currencies depreciate. As gold prices soared, other precious metals followed suit. Silver delivered a particularly stunning performance, breaking records and climbing above $80 per ounce, finishing 2025 with a staggering 164% gain. The rise in silver prices was fueled by a combination of investor demand and industrial consumption, as silver is extensively used in solar panels, electric vehicles, and battery production. "Silver was unquestionably the commodity champion of 2025," said Luke LaBaire, CEO of Equity Armor Investments.
Other precious metals also had a banner year: platinum futures surged 144%, while palladium futures jumped 87%.
Copper prices recorded their best annual gain in 16 years, while oil prices finished the year lower, highlighting a divergence in commodity performance. Copper futures in New York climbed 43% for the year, their strongest annual showing since 2009. The surge in copper was driven by increased industrial demand and supported by a reshaping of the international trade landscape. Crude oil prices experienced significant volatility influenced by geopolitical tensions but ultimately ended the year in negative territory. U.S. crude futures fell approximately 18% for the year, settling around $58 per barrel, near their lowest level in about four and a half years. The international benchmark, Brent crude, declined 17%, settling at $61.97 per barrel. Other commodities showed mixed performance: cocoa futures plummeted 48% for the year, reversing a 178% surge in 2024. Cocoa prices had soared in 2024 due to climate concerns but retreated sharply in 2025 as harvest prospects improved.
International stock markets outperformed their U.S. counterparts for the year, with AI enthusiasm and policy benefits acting as key catalysts. Bolstered by the AI frenzy, South Korea's benchmark KOSPI index skyrocketed 76%; Japan's Nikkei 225 Index advanced 26%. European markets also climbed for the year, benefiting from government defense spending plans and improved economic growth prospects. European defense stocks rallied significantly, with German arms manufacturer Rheinmetall surging 160%. The weakening U.S. dollar provided an additional tailwind for international markets: when the dollar depreciates and other currencies appreciate, the value of investment assets denominated in those currencies increases.
The world's largest cryptocurrency by market value, Bitcoin, started the year on a strong note but finished with a whimper. Bitcoin ended the year trading around $88,000, representing an annual decline of approximately 6.6%. The price had surged earlier in the year, reaching an all-time high near $126,000 in early October, largely fueled by the Trump administration's pro-cryptocurrency policies, which boosted mainstream adoption. However, a sell-off in the crypto market towards year-end spooked some investors, leading to a pullback in Bitcoin's price.
