A few points here, a gentle pullback there — nothing dramatic, but enough to make traders pause as the calendar flips. The S&P 500 and Nasdaq slid about 0.3% on the final trading day of 2025, yet the broader picture still reads like a banner year: the S&P on track for roughly a 17% gain and the Nasdaq up roughly 21% for 2025. The Dow fell about 165 points, reflecting its lighter exposure to the tech names that drove much of the advance.
A market that won't go quietly
Trading has been thin and polite, until it isn't. Stocks have eased after a mild three-day losing streak, a dose of profit-taking that matters because this stretch — the end of December and the opening days of January — often delivers a seasonally friendly lift. This year, that customary "Santa Claus" nudge has been softer, and strategists are watching whether recent selling is a short pause or the start of choppier months ahead.
The labor market offered a surprising note of strength. Initial jobless claims fell to 199,000 for the week ending Dec. 27, well below forecasts and consistent with a low-hire, low-fire backdrop. Continuing claims also declined, which undercuts fears of a sudden labor-market slide. For investors, that reading complicates the landscape: resilient employment tends to keep inflation and rate expectations higher for longer, even as corporate profits are stretched against lofty valuations.
AI, megacaps and the widening rally
Artificial intelligence remains the single most important theme behind market moves, but the story has broadened. Nvidia and other AI beneficiaries pushed parts of the market higher this year, and chipmakers, cloud providers and software firms have been in focus. That momentum has been joined by rotation into other sectors, which helps explain why the S&P could post a third straight double-digit year.
Corporate and technology developments feed the narrative. Major players are tying deeper AI capability into products and services; Apple has been reported to lean on Google’s models to sharpen Siri, a move that signals how big tech combines forces to chase AI advantages. Meanwhile, new image and generative models from other vendors are widening the toolkit that companies can deploy, changing where future profits might land. See examples of recent model rollouts and industry moves in coverage of Microsoft's MAI-Image-1 and how Apple plans to use Gemini in Siri here. For hands-on consumer features, Google’s push into agentic booking offers a glimpse of how AI could change everyday services read about Google AI Mode.
That broader AI backdrop also explains why some individual names keep stealing headlines. Nvidia completed a large equity investment in Intel this month and has been nudging suppliers to scale production of key chips, a reflection of demand tied in part to mainland China orders for AI accelerators. Those supply-chain moves ripple through semiconductors and contract manufacturers, and traders parse every hint about capacity and margins.
Commodities and oddball winners
If tech led the charge, commodities staged their own comeback. Precious metals had an extraordinary year: gold surged more than 60% and silver leapt even more, making 2025 one of the best years for both in decades. That performance has been driven by a mix of macro uncertainty, real-asset demand and investor interest in diversification outside high-flying equities.
Oddly enough, retail traders and some cyclical names also found moments to shine. Nike and Tesla rallied late in the year after company-specific catalysts — insider buying in Nike's case and renewed enthusiasm for Tesla's production and price moves — nudged shares higher even while the market overall trimmed gains.
Markets, margins and next year's mood
What does all this mean for 2026? Analysts expect the S&P could keep rising, though many warn of a potentially range-bound year if earnings growth struggles to justify current multiples. The market has learned to absorb policy surprises — last year’s tariff headlines and subsequent adjustments showed how quickly participants price in new information — but the tug between resilient labor data, sticky inflation risks and AI-driven profit expectations creates an uneasy mix.
Investors heading into the new year will likely watch three things more closely than ever: corporate earnings that match the AI-inflected optimism, supply-chain signals from chipmakers and data on the labor market. For now, the year-end slip feels like a tactical reset rather than a strategic reversal: gains are still substantial, but confidence is being tested in new ways.
Internal reading: for context on how AI is being embedded across products and services, check recent pieces on Microsoft's MAI-Image-1, Apple's plan to use Google's Gemini for Siri and Google's consumer-facing AI Mode experiments.