The US stock market is on the brink of achieving a historic milestone, poised for three consecutive years of double-digit gains, a feat that has occurred only five times since the 1940s. This year, the S&P 500 is projected to rise by 17%, following impressive increases of 23% and 24% in the previous two years. This growth comes despite challenges such as tariffs, geopolitical tensions, and a historically prolonged government shutdown.
A three-year streak of double-digit gains is rare; the S&P 500 has only seen it five times before, with two instances leading to four consecutive years of growth. Sam Stovall, a chief investment strategist at CFRA Research, noted that there was even a period in the 1990s that culminated in a five-year consecutive increase.
The stock market’s uptrend for 2025 has been fueled by robust corporate earnings, excitement surrounding advancements in artificial intelligence (AI), and optimism regarding potential interest rate cuts from the Federal Reserve. Craig Johnson, chief market technician at Piper Sandler, highlighted that these factors have been pivotal in driving the S&P 500 towards its third year of double-digit returns. “Equity markets are ending the year on a high note… driven by AI momentum and a resilient economy that has shrugged off fiscal and political headwinds,” he remarked.
Entering 2025, the S&P 500 was riding high off its strongest back-to-back annual performance since the 1990s, as Wall Street cautiously anticipated further growth. However, a dip in late January occurred after Chinese tech firm DeepSeek introduced an AI chatbot, raising concerns about excess funding in AI ventures. Nonetheless, the market rebounded as investors became more confident, betting on American companies to excel in the race for advanced AI technology, a narrative that has substantially boosted the markets this year.
In the spring, volatility surged as the Trump administration implemented aggressive tariffs, shaking global trade dynamics. However, the market stabilized after the administration scaled back some of its more severe tariff proposals, with both the S&P 500 and the Nasdaq hitting record highs in late June for the first time since February. Following this, stocks enjoyed a steady climb, supported by strong earnings reports and favorable interest rate adjustments from the Federal Reserve, making equities more attractive compared to bonds.
The Dow Jones Industrial Average also performed well, achieving a 13.7% increase this year. The index began trading around 43,000 points, fell to below 37,000 in April, and subsequently reached record highs above 45,000 in August, quickly advancing past 46,000, 47,000, and 48,000 points in a matter of weeks.
AI advancements have been a major story throughout the year, significantly contributing to the tech-heavy Nasdaq Composite’s rise of 21%. This index has outperformed the S&P 500 and Dow over the past three years. Since OpenAI unveiled ChatGPT in October 2022, interest in AI stocks has provided a strong momentum swing in the markets.
Despite moments of heightened volatility, reflected by fluctuations in the CBOE Volatility Index (VIX)—which reached levels not seen since the Covid-19 pandemic—conditions stabilized later in the year. The Treasury market also showed relative stability following earlier volatility linked to tariff discussions. The yield on 10-year Treasury bonds fell from 4.57% to 4.12%, aiding in keeping mortgage rates manageable.
Conversely, the US dollar weakened significantly against other major currencies, with the dollar index experiencing a 9.5% decline, marking its poorest annual showing since 2017. This depreciation can be attributed to factors such as diminished Federal Reserve independence, lower interest rates, and a lack of clarity surrounding US policy decisions.
Among commodities, gold futures surged by an astonishing 66%, marking the best yearly gain since 1979. Starting the year at approximately $2,640 per ounce, gold peaked at over $4,500 in December, before settling around $4,355. Investors view gold as a safe haven during crises or periods of high inflation.
Other precious metals, too, enjoyed a robust year; silver prices skyrocketed by 164% amidst heightened demand from both investors and industries such as solar energy and electric vehicles. Platinum and palladium also saw impressive gains, with increases of 144% and 87%, respectively.
In the realm of industrial commodities, copper futures gained 43% this year driven by strong industrial demand. Meanwhile, oil prices fluctuated due to geopolitical tensions, ultimately declining approximately 18% to $58 per barrel, remaining near their lowest levels in nearly four and a half years.
On the international stage, markets outperformed those in the US, with South Korea’s Kospi index soaring by 76%, propelled by AI enthusiasm, and Japan’s Nikkei gaining 26%. European markets were bolstered by increased defense spending and prospects for economic growth, with notable gains in defense stocks like Germany’s Rheinmetall.
Bitcoin’s performance contrasted starkly, starting the year strong and reaching a peak of around $126,000 in October, but ending around $88,000—a decline of roughly 6.6% for the year. This volatility reflects a combination of investor optimism following supportive policies from the Trump administration and subsequent market corrections that unsettled many crypto enthusiasts.
