Market Review: December 31, 2025
Closing Recap
U.S. stocks finished lower on December 31, 2025, marking the fourth consecutive session of declines, although all major indices closed higher for the year. The Dow Jones Industrial Average fell by 303.77 points (0.63%) to 48,063, the S&P 500 dropped 50.70 points (0.74%) to 6,845, and the Nasdaq Composite decreased by 177.09 points (0.76%) to 23,241. Despite the recent downturn, 2025 was a strong year overall, with the Dow, S&P 500, and Nasdaq achieving their third straight year of double-digit percentage gains.
Yearly Performance Highlights
For the year, the S&P 500 gained 16.39%, the Nasdaq climbed 20.36%, and the Dow increased by 12.97%. Notably, nine of the eleven S&P sectors finished the year in positive territory, with Technology leading at +24% and Communications at +21.5%. In contrast, Consumer Staples and REITs saw slight declines of around -1%.
International Performance
Internationally, South Korea (EWY) led with a remarkable +94% gain, followed by Peru (EPU) at +84%, Spain (EWP) at +74%, Greece (GREK) at +71%, and Austria (EWO) at +69%. Emerging Markets (EEM) also performed well, gaining +34%.
Economic Data
Weekly jobless claims fell to 199,000, significantly below the consensus estimate of 220,000. Mortgage rates also declined, with the average 30-year fixed rate dropping to 6.15%.
Commodities Overview
Precious metals experienced a record year, with gold prices soaring about 65% and silver gaining over 145%. However, prices fell on the last trading day due to increased margin requirements. Oil prices settled at $57.42 per barrel, marking the steepest annual loss since the pandemic began, driven by geopolitical risks and rising supplies.
Sector News Breakdown
Consumer Sector
Electric vehicle companies had mixed results, with LCID down 63% for the year, while RIVN rebounded by 47%. Nike's shares rose after CEO Elliott Hill's significant stock purchase.
Energy Sector
Utility stocks saw solid gains, particularly in nuclear and power sectors, driven by demand for AI data centers. U.S. refiners also performed well, benefiting from improved refining margins.
Financial Sector
Big banks posted significant gains, with the S&P 500 Banks Index rising 31% in 2025. Analysts remain optimistic about the sector's outlook for 2026.
Biotech & Pharma
AXSM shares surged after positive FDA feedback, while other biotech stocks had mixed results. Vaccine stocks faced challenges as demand waned.
Conclusion
As 2025 closes, the market reflects a year of significant gains despite recent volatility. The focus now shifts to 2026, with expectations for continued growth in sectors like technology and energy, alongside potential challenges in commodities and healthcare.