Trader Michael Pistillo wears “2026” glasses as he works on the floor of the New York Stock Exchange (NYSE) as the opening bell rings on December 31, 2025.
Timothy A. Clary | AFP | Getty Images
of S&P500 Despite a pullback on Wednesday, the index nevertheless capped off a bumper year.
The market-wide S&P 500 index fell 0.74% to close at 6,845.50. Nasdaq Composite It fell 0.76% to end at 23,241.99. of Dow Jones Industrial Average It lost 303.77 points (0.63%) and settled at 48,063.29.
Stock prices fell for four consecutive sessions, but the decline was modest, with the S&P 500 index still up 16.39% since the beginning of the year, marking the third consecutive year of double-digit annual growth. The Nasdaq Composite Index rose 20.36% on the AI frenzy. The Dow Jones Industrial Average rose 12.97% in 2025, hampered somewhat by the lack of tech companies.
This marks a remarkable recovery from the collapse seen in early April after President Donald Trump’s sweeping tariff announcements. At one point, the S&P 500 index even came close to entering bear market territory, falling about 19% from its February high and closing below 5,000 for the first time since April 2024.
“The administration’s lesson is that markets can absorb smarter, narrower tariffs that are phased in,” said Keith Buchanan, senior portfolio manager at Globalt Investments. “The market can now look ahead to tariff changes in 2026 for 2025, and hope that the administration remembers the lessons of 2025 and can adjust on the fly in a way that continues to allow U.S. companies to maintain margins.”
Still, the recent decline is somewhat worrying given that the last five business days of the year and the first two business days afterward are a seasonally challenging period, also known as the “Santa Claus” rally, and typically give stocks a final push toward the end of the year.
Recent profit-taking may also foreshadow some of the volatility to come. Strategists surveyed by CNBC expect the S&P 500 index could post another double-digit gain in 2026, but many worry that stocks could spend much of the year in a range as corporate earnings growth catches up with higher multiples.
S&P 500 year-to-date performance
Artificial intelligence has been a decisive force driving the market over the past three years. The S&P 500 rose 24% in 2023 after ChatGPT debuted the previous year and sparked a frenzy centered around the companies most likely to benefit from a technological revolution reminiscent of the early days of the internet. In 2024, the market-wide index rose another 23%.
The AI story has been somewhat splintered this year, as the bull market has begun to spread to other sectors and even the performance of the so-called “Magnificent Seven” stocks has been divided. alphabet It’s up 65.4% year-to-date, making it the biggest winner among megacaps as investors bet on the search giant to overtake OpenAI. Amazon It was a laggard, rising 5.2%.
Additionally, many asset classes other than megacaps started to outperform. Commodities had a particularly strong year. gold an increase of over 64%; silver An increase of over 141%.
“We’ve seen internal changes that indicate that 2026 is going to be very different than 2025, and potentially even more different than 2023 or 2024,” Buchanan said. “(Markets) will be driven more by fundamentals and less dependent on monetary policy and AI infrastructure.”
The Dow ended a winning December with a 0.7% gain, marking its eighth consecutive month of wins. This is the first time this has happened since 2018. The S&P 500 ended the month down less than 0.1%, and the Nasdaq was down 0.5% over the same period.
—CNBC’s Alex Harring and Chris Hayes contributed to this report.
