Wall Street's final session of the year is lower than usual, but it will end 2025 with a big annual gain
Wall Street's major indexes finished lower in the last trading session of 2025 but still racked up big gains for the year after a rollercoaster?year marked by uncertainty over President Donald Trump's trade tariffs and an euphoria surrounding AI-focused stocks.
S&P 500 and Dow Jones, as well as Nasdaq, all posted double-digit increases this year. This is their third consecutive year of gains, which was last seen between 2019-2021.
The Dow posted its eighth consecutive monthly gain, which is the longest streak since 2017-2018. The rally was boosted by an insatiable demand for artificial intelligence stocks, which pushed all three indices to new record highs.
The preliminary data shows that the S&P 500 dropped 50.37 points or 0.73% to 6,847.18 while the Nasdaq Composite fell 178.03 points or 0.76% to 23,241.05. The Dow Jones Industrial Average dropped 301.95 or 0.62% to 48,065.11.
Energy stocks and tech shares fell on the day. Microsoft, which 'has among the largest weights in the sector,' was down and EQT Corp. fell sharply.
Giuseppe Sette is the co-founder and President of Reflexivity. He said that it was perfectly acceptable for a bull market to experience moments of loss. Profit-taking was possible when liquidity levels were low.
Wall Street has made a remarkable comeback since April's lows. Trump's "Liberation Day" tariffs caused a global market meltdown, drove investors away from U.S. stock and harmed growth by clouding interest rate expectations.
The benchmark S&P 500 index is still lagging behind other global indexes. Especially the Asia-Pacific ex-Japan index, which has risen nearly 27% by 2025 as investors diversified.
Jitania Kandhari, deputy CIO for the multi-asset solutions group at Morgan Stanley Investment Management, said: "We expect the performance of these markets to broaden and deepen by 2026.
The era of narrow winners has given way to an era with a wider and more global distribution of opportunities. The equal-weighted S&P is a better alternative to the cap-weighted S&P.
According to Stock Trader's Almanac, Wall Street's fourth session of consecutive losses was contrary to expectations of a "Santa Claus Rally" where the S&P 500 gains on the last five days of December as well as the first two of January.
Nvidia, a bellwether chipmaker that has seen its share price rise sharply in the past year, is one of many AI traders who have benefited. It was the first public company to reach a market capitalization of $5 trillion.
Alphabet's big leap in the S&P 500 index has helped the communication services index to be the best performer this year.
Storage-chip manufacturers such as Micron Technology and Western Digital are set to outperform S&P 500 peers after having more than tripled their value by 2025.
Fiserv and FMC Corporation were the biggest losers of the year.
Investors have priced in further cuts in the Federal Reserve's monetary policies in 2026 after recent economic data, and expectations of a dovish new Fed chair.
Nike's stock rose after CEO Elliott Hill announced that he had recently purchased shares worth about $1 million. Vanda Pharmaceuticals soared after the U.S. Food and Drug Administration granted approval for its drug to prevent motion-induced nausea.
The trading volume was low during the holiday-shortened weekend, as markets were closed on New Year's Day.
(source: Reuters)
