2025 was a strong year for markets, even as headlines competed for attention: trade tariffs in April, new artificial intelligence companies, a new tax law—the One Big Beautiful Bill Act—and more.
Despite the noise, markets delivered solid results. U.S. stocks hit new record highs, international stocks performed even better, and bonds rebounded meaningfully. The S&P 500 has now had strong double-digit gains in six of the last seven years. Since hitting a low point in 2022, it has almost doubled in value.
Years like 2025 are a helpful reminder: markets are often resilient, even during times of uncertainty. Staying disciplined, diversified, and focused on long-term goals continues to be one of the most effective ways to navigate change.
As we look ahead to 2026, understanding what shaped the past year can help provide perspective and confidence moving forward.
What happened in markets and the economy in 2025
The S&P 500 gained 17.9% including dividends (the payments companies make to shareholders). It reached 39 new all-time highs during the year. The Dow Jones Industrial Average rose 14.9% and the Nasdaq (which includes many technology stocks) returned 21.2%.
- Bonds gained 7.3%, their best year since 2020.
- International stocks from both developed and emerging markets gained more than 30%.
- The U.S. dollar fell 9.3% compared to other currencies.
- Bitcoin fell approximately 6.5% from $93,714 to $87,647.
- Gold prices jumped 64% to $4,341 per ounce, while silver climbed from $29.24 to $70.60 per ounce.
A timeline of major events in 2025
Many of the year’s most significant events were possibilities investors had already anticipated. For example, investors knew President Trump might announce tariffs. They also knew the Federal Reserve might lower interest rates if the job market weakened. And many expected a new tax bill since Republicans controlled Congress.
Even when markets react strongly, like they did to the tariff announcement in April, they can recover quickly. The main surprise was DeepSeek in January, when a Chinese company showed that AI technology could be developed more efficiently than expected.
Notable events included:
- January 27: AI-related stocks declined following DeepSeek news.
- April 2-9: Tariff announcement leads to a market drop, followed by a 90-day pause and market rebound.
- July 4: The “One Big Beautiful Bill Act” extends many tax cuts.
- September 17: The Fed begins cutting interest rates.
- October 1: The government shuts down for 43 days.
- December 16: The unemployment rate reaches a four-year high of 4.6%.
Three themes that shaped 2025
- Artificial intelligence dominated market news throughout 2025.
The “Magnificent 7” technology companies now make up about one-third of the S&P 500. As a result, many investors own these stocks through diversified portfolios—even without owning individual stocks directly. - Tariffs created uncertainty but had less economic impact than anticipated. Companies adapted, some tariffs were paused, and consumers kept spending—showing how difficult it can be to predict how policy changes will affect the economy or markets.
- Diversification mattered.
Many different types of investments performed well in 2025. International stocks outperformed U.S. stocks, bonds delivered strong returns, and gold hit record highs. Investors with well-diversified portfolios were positioned to benefit from multiple sources rather than relying on any single outcome.
The bottom line
2025 was a strong year for investors. But its most enduring lesson goes beyond performance. Markets may react to headlines, surprises, and uncertainty—but long-term outcomes are shaped by discipline, diversification, and staying aligned with a well-designed plan.
As we plan for 2026 and beyond, this perspective helps reinforce confidence through market cycles and keeps the focus where it belongs: using your investments as a tool to support the life you want to live.
Disclosures:
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