December 2025 Market Review: Historic Gains Despite Tariffs and Turbulence

January 2, 2026

Sean Gross, CFP®, AIF® | Co-Founder & CEO 

Despite numerous significant events throughout the year, 2025 proved to be an exceptionally strong period for financial markets. Investors navigated through tariff policy shifts in April, continuous advancements in artificial intelligence technology, the enactment of the One Big Beautiful Bill Act, and various other developments. Throughout these challenges, U.S. equities reached unprecedented levels, international markets delivered superior performance, and fixed income securities extended their recovery. The S&P 500 has now posted returns exceeding 10% in six out of the last seven years and has approximately doubled since reaching its trough in 2022.

The previous year demonstrates that maintaining discipline and concentrating on long-term objectives represents the most effective approach to managing uncertainty.

 2025 Market and Economic Highlights

• Including dividends, the S&P 500 advanced 17.9% during 2025, recording 39 fresh record peaks. The Dow Jones Industrial Average climbed 14.9% while the Nasdaq delivered a 21.2% return.
• The VIX, which gauges equity market volatility, concluded at 14.95 and remains modest relative to historical levels, despite spiking to 52.33 during April.
• The Bloomberg U.S. Aggregate Bond Index advanced 7.3%, marking its strongest annual performance since 2020. The 10-year Treasury yield declined to 4.17% by year-end from 4.57% at year-start.
• Based on the MSCI EAFE Index and MSCI EM Index respectively, international developed markets and emerging markets each rose more than 30% when measured in U.S. dollar terms.
• The U.S. dollar index closed at 98.32, dropping 9.3% from its 108.49 opening level. The dollar touched a low point of 96.63 in September.
• Bitcoin declined approximately 6.5% from $93,714 to $87,647, following a peak of $125,260 in October.
• Gold prices surged throughout the year, ending at $4,341 per ounce for a 64% increase. Silver prices similarly climbed to $70.60 per ounce from $29.24 at year-start.

Significant developments throughout 2025

Numerous developments during the past year fell into the category of "known unknowns." Former Secretary of Defense Donald Rumsfeld popularized this concept by differentiating "known unknowns" from "unknown unknowns." For investors, this framework proves valuable since the former represents uncertainties that can be anticipated. When markets respond to such events, investors can prepare beforehand and avoid unexpected disruptions.

Tariff-related concerns, for example, were clearly on investors' radar screens before April 2. Though this awareness didn't prevent market reactions given the magnitude of these trade measures, it enabled markets to recover swiftly once developments unfolded. Investors also anticipated Federal Reserve rate adjustments following labor market softening. Many likewise expected passage of new tax legislation given Republican control of both congressional chambers.

Even AI-related concerns, which represent perhaps the most significant market uncertainty currently, have remained prominent in investor thinking. While the DeepSeek development in January—when a Chinese AI firm demonstrated that models could be developed and operated more economically—caught markets off guard, the similarities to the dot-com era and previous episodes of elevated capital spending by major corporations are widely recognized.

The following represents a summary of the top 10 market-moving developments throughout the year: 

• January 20: President Trump takes office. 
• January 21: Announcement of the $500 billion private-sector Stargate project. 
• January 27: AI-related equities decline following DeepSeek announcement. 
• April 2 to 9: "Liberation Day" tariff declaration triggers a market correction. A subsequent 90-day suspension sparked a recovery. 
• July 4: The "One Big Beautiful Bill Act" becomes law, continuing numerous Tax Cuts and Jobs Act provisions.
• September 17: The Fed initiates a new rate-cutting cycle. 
• September 22: Nvidia and OpenAI unveil a significant strategic partnership and investment, generating concerns about "circular deals." 
• October 1: The government enters what becomes a record 43-day shutdown. 
• October 14: Jamie Dimon cautions about "cockroaches" following Tricolor and First Brands bankruptcies. 
• December 16: The BEA reports the unemployment rate reached a four-year peak of 4.6% in November. 

Three primary themes characterized the yearWhich themes influenced markets throughout these developments?

First, artificial intelligence clearly dominated market discussion during 2025. From substantial infrastructure commitments to worries regarding market concentration, AI emerged as a significant driver of economic expansion and market performance. The Magnificent 7 stocks now constitute approximately one-third of the S&P 500, establishing concentration risk that ensures most investors maintain exposure to these equities whether intentionally or not. Acknowledging this factor when developing investment strategies and financial plans will become increasingly critical.

Second, tariff policy generated uncertainty but produced less economic disruption than anticipated. While levies on imported goods increased substantially for numerous trading partners, the feared economic ramifications largely did not occur. This resulted from corporate adaptation, tariff suspensions or reductions, and sustained consumer spending. For investors, this illustrates that policy changes in Washington—whether involving trade or federal finances—do not always produce obvious effects on the economy or markets.

Third, numerous asset classes delivered strong performance during 2025. International equities outperformed U.S. markets, partly due to U.S. dollar weakness. Fixed income securities produced solid returns and have substantially recovered their 2022 losses. Additional individual assets including gold also achieved record performance. Therefore, capturing gains from these asset classes depends less on selecting individual investments and more on maintaining appropriate asset allocation that can capitalize on opportunities while controlling risk exposures.

The bottom line? 2025 represented a successful year for investors. While strong market performance merits recognition, it reinforces the critical importance of maintaining investment discipline. Investors should carry forward this principle as they develop their investment and financial plans for the year ahead.

November 2025 Market Chartbook

Sean Gross, CFP®, AIF® | Co-Founder & CEO

Click here to view our November 2025 Market Chartbook.

November 2025 Market Review: Navigating Volatility and Economic Uncertainty

Sean Gross, CFP®, AIF® | Co-Founder & CEO

November brought a temporary surge in market volatility that rippled across numerous asset classes. Despite solid year-to-date gains in stocks, bonds, and international markets, concerns about artificial intelligence stocks and Federal Reserve policy direction weighed on investor sentiment. The government shutdown further complicated the economic picture by postponing critical data releases, making it harder to assess the economy's health.

Many asset classes recovered and stabilized as the month concluded. This pattern reinforces a crucial lesson for long-term investors: maintaining a flexible, well-balanced portfolio designed to weather market fluctuations is essential. Achieving investment success means keeping sight of long-term objectives rather than responding to headlines or pursuing short-term trends.

What factors influenced November's market movements, and how should investors approach the final weeks of the year?

November's Primary Market and Economic Developments

• The S&P 500 edged up 0.1% for November, while the Dow Jones Industrial Average added 0.3% and the Nasdaq slipped 1.5%. Through year-end, the S&P 500 has advanced 16.4%, the Dow has climbed 12.2%, and the Nasdaq has surged 21.0%.
• The VIX, which measures stock market volatility, closed at 16.35 after spiking to 26.42 during the month.
• The Bloomberg U.S. Aggregate Bond Index increased 0.6% in November and has delivered 7.5% returns year-to-date. The 10-year Treasury yield concluded November at 4.02%, temporarily dipping below the 4% threshold.
• International developed markets, measured by the MSCI EAFE Index, rose 0.5% in U.S. dollar terms, while emerging markets declined 2.5% according to the MSCI EM Index. For the year, the MSCI EAFE Index has returned 24.3% and the MSCI EM Index 27.1%.
• The U.S. dollar index finished at 99.46, briefly exceeding the 100 mark.
• Bitcoin dropped approximately 17% during November, closing at $91,176.
• Gold prices finished higher at $4,218, though remaining below October's record peak of $4,336.
• The delayed September employment report revealed 119,000 new jobs were created, while the unemployment rate increased to 4.4%. No October jobs report will be released.

A temporary shift away from risk assets

November witnessed a temporary retreat from risk assets including technology stocks, high-yield bonds, cryptocurrencies, and similar investments. Questions about the viability of AI-related investments and recalibrated expectations for Federal Reserve rate cuts drove this shift. The S&P 500 has experienced six pullbacks of 5% or more this year, the highest count since 2022 though still aligned with historical norms. Several major asset classes recovered in the month's closing days, pushing the S&P 500 into positive territory.

AI-focused technology stocks posted their weakest week since April during the month. Volatility emerged from concerns about spending levels, debt burdens, profit margins, and potential bubble risks. However, underlying fundamentals remained solid, with companies like Nvidia delivering robust third-quarter revenue and earnings growth. Several stocks, including members of the Magnificent 7, rallied following these earnings announcements.

Cryptocurrencies underwent a sharp correction during this risk-averse period. Bitcoin tumbled more than 30% from its early October peak above $125,000, briefly trading below $85,000 and erasing year-to-date gains. While cryptocurrency adoption has expanded among investors, such episodes highlight that these assets can be highly speculative and subject to dramatic swings. Maintaining proper asset allocation and implementing ongoing risk management remain critical considerations.

Bond markets advanced in November, supported by declining long-term interest rates as the 10-year Treasury yield temporarily fell below 4% again. This movement reflected revised expectations about government policy that could lead to lower rates over time. The Bloomberg U.S. Aggregate Bond Index has posted a 7.5% year-to-date gain, its strongest performance since 2020, helping to provide stability to diversified portfolios.

Government shutdown concludes amid lingering economic questions

The historic 43-day government shutdown came to an end, though federal funding only extends through January 2026. This timeline means political uncertainty will resurface in just a few months. Despite these challenges, markets generally looked past the shutdown, even as the absence of economic data created additional complications.

The Bureau of Labor Statistics published the delayed September employment report, originally scheduled for October release. Job creation that month surpassed forecasts, bouncing back from summer weakness. However, revised data revealed a loss of 4,000 jobs in August, marking the second month of negative employment growth this year. The unemployment rate climbed to 4.4% in September, its highest reading since October 2021, though this remains relatively low historically.

A complete October employment report will not be issued since household and business surveys were not conducted that month, though some data will appear with November's report on a delayed schedule.

Federal Reserve rate cut expectations have evolved

These data gaps mean the Federal Reserve will approach its mid-December meeting with an incomplete economic assessment. Market expectations for a rate reduction at the upcoming meeting have fluctuated significantly, with probabilities falling in mid-November before recovering. Current market-based projections suggest the Fed will implement a rate cut in December, followed by additional cuts in April or June 2026.

Additional economic indicators, including consumer confidence measures, have also deteriorated. The University of Michigan's Index of Consumer Sentiment preliminary reading fell from 53.6 to 50.3 in November. This decline reflects ongoing worries among Americans regarding employment prospects, elevated prices, and their overall financial well-being. While many households face financial pressure, weak sentiment in recent years has not resulted in decreased spending or reduced corporate revenues.

The bottom line? November's market fluctuations and persistent economic uncertainty serve as reminders that stock market volatility is a normal occurrence. Investors should maintain perspective as the year draws to a close.

Reasons for Investors to Be Grateful This Holiday Season

Sean Gross, CFP®, AIF® | Co-Founder & CEO

The arrival of the holiday season offers an opportune moment to reflect on our blessings, including those in our financial portfolios. Investors often concentrate on potential risks rather than celebrating successes. With markets showing positive performance, now is an excellent time to look back at the past year and gain valuable perspective before facing new challenges and opportunities ahead.

This year, the trend of strong market returns has continued. Year to date, the S&P 500 has posted double digit gains including dividends, and bonds have delivered roughly 7% returns as tracked by the Bloomberg U.S. Aggregate Bond Index. Notably, international stocks have surpassed U.S. stocks for the first time in several years. Diversified portfolios have generally benefited from this widespread strength across multiple asset classes. What considerations should investors keep in mind as they look toward the upcoming year?

The bull market has reached its fourth year

Investors have reason to celebrate that financial markets have delivered positive results this year despite periods of volatility. The current bull market cycle, which started following the October 2022 market low, has now entered its fourth year.

Historical patterns indicate that bull markets typically extend much longer than bear markets, frequently lasting five to ten years or beyond. Previous bull markets have generated cumulative gains that substantially exceed what this cycle has produced thus far, even amid significant challenges during those periods. Although legitimate concerns exist regarding valuations and market concentration, successful long-term investing requires weathering various market environments.

The bond market's favorable returns deserve special attention following several difficult years marked by rising interest rates and elevated inflation. With rates stabilizing and the Federal Reserve resuming monetary policy easing, bond prices have rebounded. This illustrates why maintaining exposure to both stocks and bonds continues to be vital for achieving portfolio balance and generating income.

The market’s strength reinforces a crucial lesson: attempting to time markets based on short-term developments is challenging and potentially harmful when not integrated into your comprehensive financial strategy. This proved true even in April when markets approached bear market territory following new tariff announcements. Markets quickly recovered and reached fresh all-time highs. Disciplined investors were compensated for their patience, whereas those who responded emotionally to news may have forfeited gains and could remain uninvested.

The Fed is reducing rates as inflation has moderated

Investors can also appreciate that inflation has moderated, despite the pace of improvement being slower than some forecasts anticipated. Annual price increases have been approximately 3%, which still presents difficulties for households and policymakers. However, from an investment perspective, inflation has become considerably more predictable, with concerns about accelerating inflation largely subsiding compared to previous years.

This improvement has enabled the Fed to initiate rate cuts after maintaining restrictive policy for much of the year. These adjustments also aim to bolster the job market, which has shown signs of softening since summer. Lower rates have historically supported both stocks and bonds by decreasing borrowing expenses for companies and consumers while enhancing the value of existing bonds carrying higher yields. While inflation and interest rates will continue influencing markets, the specter of perpetually rising inflation and rates seems to have passed.

Proper asset allocation balances risk and opportunity

Investors should also recognize the value of maintaining appropriate asset allocation and ongoing risk management. The coming year will undoubtedly present fresh sources of uncertainty, as every year does. These developments will naturally spark concerns about economic downturns, market corrections, and potential cycle endings. Instead of responding to each market event, long-term investors benefit from holding portfolios designed to adapt to various market and economic phases.

We can be grateful for access to diverse assets that help achieve risk-reward balance. Risk management matters throughout an investor's journey, particularly following a three-year market advance. The S&P 500 price-to-earnings ratio currently stands at 22.6x, exceeding historical averages and gradually approaching dot-com era peaks.

While valuations don't forecast near-term market direction, they do suggest future returns might be more moderate, particularly relative to less expensive asset classes and sectors. Therefore, maintaining realistic expectations and holding exposure to more attractively valued market segments remains important.

Uncertainty surrounding artificial intelligence will continue. Given this technology's transformative potential, predicting its impact on equity prices remains challenging, similar to the difficulty of forecasting the internet revolution's trajectory beginning in the mid-1990s. Political uncertainty is also expected to persist amid evolving tariff policies, geopolitical tensions, rising national debt, and other factors. Recent experience confirms that overreacting to these developments can be detrimental and disruptive to financial plans.

The bottom line? The holiday season provides an excellent opportunity to appreciate positive developments and evaluate your portfolio structure. A flexible, well-designed portfolio harmonizes various asset classes consistent with financial objectives. This approach remains essential for successfully managing both challenges and opportunities in the months ahead.

Guest Article: The United States outgrows all its major peers.

We are delighted to share, with permission, the following article from highly esteemed economist Daniel Lacalle, PhD.1

Daniel Lacalle 

November 2, 2025

Never trust experts who criticise the U.S. economy and have argued for years that it should follow the policies of France, Germany, or Canada.

Statism never works, and France, Germany, Canada, the UK, and Japan are in stagnation, with bloated public sectors that hinder economic growth and excessive regulations and taxes that hurt jobs and investment.

The United States will deliver stronger economic growth than all its major advanced peers in 2025, with inflation, real wage growth, and unemployment figures that also outperform countries like Japan, the UK, Canada, France, and Germany.

In the United States, it is common to read negative remarks about the economy from the same mainstream economists who defended the implementation of European-style Keynesian policies. The results are evident. The United States is growing faster and in a healthier way than all its peers that followed Keynesian spending and tax policies.

Official figures indicate that the US published the fastest economic growth rate among advanced peers for 2025. The economy is growing at 3.8% annualised; the IMF estimates US real GDP growth at 2.0% for 2025, compared to only 0.2% for Germany, 0.7% for France, 1.1% for the UK, 1.2% for Canada, and 1.1% for Japan. Furthermore, the Federal Reserve of Atlanta expects 3.9% annualised growth in the US’s third quarter.

It is important to highlight the quality of this economic growth. The US economic development in 2025 is driven by strong consumer demand, technological strength, and continued investment and, more importantly, with a decline in government spending. In contrast, Japan, Germany, Canada, the UK, and France see weak investment, poor consumption growth, and sluggish external demand, whereas government spending is one of the key factors in “growth.”. Big government and high taxes are limiting their growth to less than 1%.

The US inflation rate is stable, while Japan and the UK see rising and accelerating figures in their consumer price index.

Annual US inflation settled at 3% in September and is expected to ease further in October. However, inflation in the UK remains at 3.8%, the highest in thirteen months. In Japan, consumer prices have risen to the highest level in a year and are expected to accelerate into 2026, according to Bloomberg Economics.​ While the US sees inflation stability and Truflation figures show an annualised rate of 2.25%, both the UK and Japan are suffering rising inflation and economic stagnation.​

The US labour market remains strong and is showing real wage growth, considering the decrease in government and immigration jobs. Federal employment in the US has declined through 2025, with government jobs dropping by 97,000 since January, but the average monthly increase in private sector jobs remains positive. Compared to its European peers and Japan, the US registers lower unemployment and a healthier mix of private sector job growth. Understanding the significant impact of lower immigration and government jobs is essential to analysing the US labour market’s strength correctly.

US real wage growth in 2025, at 1.5%, is almost double that of France, Germany, and the UK and much higher than in Japan, where the figure is negative.

If we compare the United States’ employment, real wage growth, inflation and GDP growth with Canada’s, the difference is striking. Government interventionism, massive regulation and high taxes, as well as a misguided immigration policy, have made Canada slump to stagnation and loss of jobs. Canada’s unemployment rate is twice the US rate, and its growth is less than half.

The combination of strong US GDP growth, improved inflation control, and strong domestic private labour market performance, reducing government spending and immigration jobs, put the United States significantly ahead of all its peers, proving that supply-side measures, tax reductions, and deregulation, as well as a reduction in government spending, drive economic growth and prosperity, while big government and high taxes only bring stagnation and a debt crisis.

1Daniel Lacalle (Madrid, 1967). PhD Economist and Fund Manager. Author of bestsellers "Life In The Financial Markets" and "The Energy World Is Flat" as well as "Escape From the Central Bank Trap". Daniel Lacalle (Madrid, 1967). PhD Economist and Fund Manager. Frequent collaborator with CNBC, Bloomberg, CNN, Hedgeye, Epoch Times, Mises Institute, BBN Times, Wall Street Journal, El Español, A3 Media and 13TV. Holds the CIIA (Certified International Investment Analyst) and masters in Economic Investigation and IESE.