US stock market ends 2025 on a high note after volatile year

It's been a rollercoaster year for financial markets, but U.S. stock investors are entering 2026 on a high note.

U.S. President Donald Trump's global trade tariffs sent shockwaves through markets in the spring. But by the summer, the U.S. was experiencing record growth, fueled by strong company profits and confidence in artificial intelligence investments.

The S&P 500 is on track to end the year up about 17%, its third straight year of double-digit growth.

Analysts say next year could be another big year for stock investors. However, with changes in leadership at the US central bank and With concerns growing that AI stocks are overvalued, the road ahead could be rocky.

The tech-heavy Nasdaq Composite is up 21% this year, while the Russell 2000 index of smaller companies is up about 12% year to date.

In early April, when Trump announced hefty tariffs on U.S. trading partners, the S&P 500 fell to the brink of a bear market – Wall Street calling for a 20% drop from its most recent high. The Nasdaq Composite and Russell 2000 indexes did briefly fall into a bear market.

But major indexes quickly recovered after Trump lifted his highest tariffs, easing Wall Street's fears of an economic downturn caused by the tariffs.

Since then, the stock has risen to new highs.

That's despite ongoing concerns about the economy, Robert Edwards, chief investment officer at Edwards Asset Management, said in a note.

“The market will continue to climb the wall of anxiety next year,” he said.

He added that 2026 “should be another record year for equities,” partly pointing to expectations of lower borrowing costs, which could boost corporate earnings and lead to higher stock prices.

Strong earnings growth in corporate America has been a key driver of the stock market rally since the tariffs were imposed. There was a major trauma in the spring, said Parag Tatte, equity strategist at Deutsche Bank.

At the same time, geopolitical tensions, Trump tariffs and expectations of lower interest rates have made the situation worse. investor demand for safe-haven assets this yearsuch as gold and other goods. The price of gold is growing by almost 70% per year.

Bitcoin, on the other hand, is struggling to keep up with the high returns of stocks and gold.

Despite the Trump administration's support for digital assets earlier in the year, the world's largest cryptocurrency is likely to end 2025 slightly lower after falling sharply from record highs in October.

Investor enthusiasm for massive AI spending has helped several tech companies outperform the broader S&P 500 index.

The top five companies – Nvidia, Apple, Microsoft, Amazon and Alphabet – make up almost 30% of the overall index.

But in recent months Concerns intensify in Silicon Valley and not just the bursting of the AI ​​bubble, as the values ​​of AI-related tech companies have skyrocketed and companies continue to spend a lot of money about a growing industry.

Analysts say corporate earnings growth appears to be expanding beyond the technology sector. That could provide investors with a cushion as tech company valuations remain under scrutiny.

Deutsche Bank's Mr. Tutt said growth accelerated in the third quarter of 2025 for mid-market companies, not just tech giants. He called it a “pivotal event.”

But even with broader gains in the U.S. stock market, it remains to be seen whether the S&P 500 can maintain its momentum if the tech sector's rally slows.

“The rotation is already happening,” Mr. Tutt said, referring to investors moving away from big technology stocks. “The road can be noisy.”

There are also ongoing concerns among professional investors that some non-tech stocks are also overvalued.

Analysts at Vanguard forecast annual returns for U.S. equities of between 3.5% and 5.5% over the next decade, a relatively muted forecast compared with recent gains.

In 2025, the U.S. economy “probably held up better than most people expected,” said David Sekera, chief U.S. market strategist at Morningstar.

Largest economy in the world picked up speed three months before Septemberexpanding at an annual rate of 4.3%, up from 3.8% in the previous quarter, its strongest growth in two years.

But that doesn't mean there won't be big economic question marks in the coming months.

There is still a possibility that Trump's tariff policies could cause another surge in the markets. Negotiations between Washington and major trading partners will be a “constant headline,” Mr. Sekera said.

The US labor market also showed signs of weakness. Unemployment rate rose to a four-year high Growth was 4.6% in November, down from 4.4% in September, according to Labor Department data.

“With political risk not abating any time soon,” Charles Schwab analysts wrote in a research note, “the bar for a pullback or mini-correction in early 2026 is not that high.”

Trump also New Federal Reserve Chairman expected in the coming weeks to succeed Jerome Powell after his term expires in May.

The decision presents “a lot of uncertainty” for investors heading into 2026, said Paul Stanley, chief investment officer at Granite Bay Wealth Management.

Trump, who has been pressuring Powell to cut interest rates, has said he will choose a Fed chairman he believes will be committed to lowering borrowing costs.

Wall Street investors will be focused on understanding how the leadership change will affect the future development of monetary policy.

“With changes in Fed chairman comes volatility,” Mr. Stanley said.

As a result, investors will face plenty of unpredictability even as analysts expect another strong year.