5 themes that will define business and markets in 2025: Morning Squawk

Have a nice Wednesday and New Year’s Eve. I have decided that there are three main groups of holiday observers this year. People who go to parties or people who stay home and watch the ball drop in Times Square. People doing late night training classes and races. and those who are about to go AMC Watch the “Stranger Things” finale.

This newsletter typically covers five things you need to know before the market opens. That list will now include Federal Reserve minutes showing a contentious December meeting and new details about SoftBank’s investment in OpenAI.

But as 2025 comes to a close, we’d like to take a step back and look at the five biggest trends that shaped Wall Street, Main Street, and Silicon Valley this year.

Here are five themes investors should consider as we close out 2025.

This year was another good year for investors.

Major market indexes have risen to record highs, and the average of the three major indexes has been on a positive trend for the third consecutive year. But it’s been a bumpy road: S&P500 It briefly slipped into bear market territory in April after President Donald Trump announced tariff plans, some of which he later reversed. Markets also overcame a wall of concerns over spending on artificial intelligence and lingering inflation.

After a tumultuous year after buying the dip after the tariff announcement, retail investors are showing appetite for hot tech stocks such as: Palantir and Nvidia. Meanwhile, Wall Street is optimistic that stocks will rise further in the new year.

Precious metals and cryptocurrencies also hit new highs this year. Here’s how the various investment classes will fare in 2025 with one trading session remaining:

After President Trump returned to the White House in January, new tariffs on U.S. trading partners were on the agenda of investors and business leaders.

Companies scrambled to adjust their supply chains ahead of President Trump’s sweeping and costly tariffs on most foreign imports. Some companies tried to curry favor with Washington, D.C., to avoid facing the harshest obligations, but they received mixed reviews. Economists, meanwhile, feared the levy could reignite inflationary pressures and lead to higher prices for consumers, while they said small businesses would not be able to absorb rising costs in the same way as larger companies.

But the fate of President Trump’s trade policy now hangs in the balance as the world awaits a Supreme Court ruling on whether new tariffs are legal. White House officials said there are other ways to accomplish the enormous task even if the nation’s highest court rules against the president.

The story of 2025 cannot be told without the influence of artificial intelligence companies and their technologies.

AI giants like Nvidia and OpenAI have signed multibillion-dollar deals with and even between companies focused on hardware and data centers as they scramble to meet surging demand. AI has once again captured Wall Street’s imagination, prompting investors to jump on stocks related to trading.

But the sector also had its fair share of skeptics. Critics’ biggest concern is the possibility of the AI ​​bubble bursting. Such an event would mark a paradigm shift for the U.S. economy, which will become increasingly reliant on the stock market and AI-related spending.

In 2025, President Trump launched a campaign to pressure central banks to lower interest rates, with the US Federal Reserve and its policymakers playing a central role. The Fed has cut interest rates three times this year, bringing the key overnight borrowing rate to a range of 3.5% to 3.75%. Still, the president pressed for more.

President Trump has said he is “willing to fire” Chairman Jerome Powell, a move that would be unprecedented and, as the Supreme Court has shown, legally questionable. In August, he went even further, attempting to fire Fed Director Lisa Cook over allegations of mortgage fraud. The Supreme Court allowed Mr. Cook to remain in office while he challenges his dismissal.

Some Fed watchers worry that President Trump could get the Fed influence he wants in 2026. Chairman Powell’s term ends in May, and President Trump will have a chance to nominate him as the central bank’s next leader. As the Fed grapples with a stagnant labor market and persistent inflation, there is wide disagreement among voting members about the future direction of interest rates. The vote for the next chair could be decisive.

For American consumers in 2025, one letter said it all. The “K”-shaped economy has become the epitome of an economic environment in which wealthy consumers flee while low-income earners succumb to rising costs.

This “K”-shaped economy, which celebrates how the two ends of the economic spectrum diverged in opposite directions, helps explain why airlines, for example, rushed to develop premium products at the same time as fast-food chains promoted value-oriented menu items.

On the other hand, it has become increasingly impossible to ignore a job market with “few jobs and few layoffs.” Economic policymakers were concerned about slowing labor force growth, with recent college graduates especially feeling the pinch. This has been a year that has had a negative impact on the economy, with American consumer sentiment reportedly at an all-time low. A historically long government shutdown didn’t help either.

To celebrate the end of the year, we thought we’d highlight some of the coolest subheadings from this year’s newsletters. If we missed something particularly interesting, please let us know by emailing alex.harring@versantmedia.com. Some of our favorites are listed below.

Special thanks to CNBC’s Sara Salinas, Jacob Pramuk, and Michele Luhn, who were the authors of “Morning Squawk” until this fall. Josephine Rozzelle edited this version.