The year 2025 was remarkably strong for financial markets, even though many significant events occurred throughout the year. Last year brought numerous headlines, including tariff announcements in April, continuing developments in artificial intelligence companies, the passage of new tax legislation called the One Big Beautiful Bill Act, and much more. Despite all this activity, investors likely ended the year satisfied as U.S. stocks reached new record highs, international markets performed well, and bonds continued to recover. The S&P 500—a key measure of large U.S. company stock performance—has now delivered returns greater than 10% in six of the past seven years. The index has nearly doubled in value since hitting its low point in 2022.
Last year’s results remind us that the most effective approach during uncertain times is to stay disciplined and keep your attention on long-term financial objectives. As we move into 2026, learning about what influenced markets in 2025 can help investors handle both challenges and opportunities that may come.
Important Market and Economic Information from 2025
• The S&P 500 increased by 17.9% including dividends during 2025, reaching 39 new record highs. The Dow Jones Industrial Average—another major stock market measure—increased 14.9%, and the Nasdaq returned 21.2%.
• The VIX, which measures how much stock prices are expected to move up and down, stayed low compared to historical levels, ending at 14.95. It had climbed as high as 52.33 in April.
• The Bloomberg U.S. Aggregate Bond Index—a measure of bond performance—gained 7.3%, its strongest performance since 2020. The 10-year Treasury yield (the return on a key government bond) ended the year at 4.17%, down from 4.57% at the year’s start.
• International developed markets and emerging markets (stocks from other countries) each gained over 30% when measured in U.S. dollars, based on the MSCI EAFE Index and MSCI EM Index.
• The U.S. dollar index ended the year at 98.32, falling 9.3% from 108.49 at the beginning of the year. The dollar reached its lowest point of 96.63 in September.
• Bitcoin declined about 6.5% from $93,714 to $87,647, after climbing as high as $125,260 in October.
• Gold prices increased throughout the year, finishing at $4,341 per ounce—a 64% gain. Silver prices also climbed to $70.60 per ounce from $29.24 at the start of the year.
Important events that happened in 2025
Many events from last year were uncertainties that investors expected might happen, even if they didn’t know exactly when or how. Former Secretary of Defense Donald Rumsfeld made famous the idea of “known unknowns” versus “unknown unknowns.” For investors, this difference matters because “known unknowns” are uncertainties we can anticipate. When markets react to these types of events, investors can prepare in advance rather than being surprised.
For example, concerns about tariffs (fees on imported goods) were already on investors’ minds before April 2. While this didn’t reduce the market’s reaction due to how large these tariffs were, it did help the market recover quickly once events unfolded. Investors also expected the Federal Reserve (the Fed)—which manages U.S. interest rates and monetary policy—would likely adjust interest rates once employment weakened. Many also anticipated new tax legislation would pass since Republicans controlled both parts of Congress.
Even concerns about AI—artificial intelligence technology—which may be the biggest uncertainty for markets today, have been top of mind for investors. While the DeepSeek moment in January was unexpected (when a Chinese AI company demonstrated that AI models could be created and operated more affordably), the similarities to the dot-com boom and previous periods when large companies spent heavily on technology are well understood by investors.
To summarize the major events that moved markets over the year, here are the top 10:
• January 20: President Trump takes office.
• January 21: The $500 billion private-sector Stargate project is announced.
• January 27: AI stocks decline on DeepSeek news.
• April 2 to 9: “Liberation Day” tariff announcement causes a market correction (a decline of at least 10%). This was followed by a 90-day pause which led to a market rally (increase).
• July 4: The “One Big Beautiful Bill Act” becomes law, extending many Tax Cuts and Jobs Act provisions.
• September 17: The Fed begins lowering interest rates again.
• September 22: Nvidia and OpenAI announced a major strategic partnership and investment, raising concerns of “circular deals.”
• October 1: The government shuts down for what would be a record-setting 43 days.
• October 14: Jamie Dimon warns of “cockroaches” after the bankruptcies of Tricolor and First Brands.
• December 16: According to the BEA (Bureau of Economic Analysis), the unemployment rate reached a four-year high of 4.6% in November.
Three important themes shaped last year
What themes influenced markets throughout these events? First, artificial intelligence clearly dominated market stories throughout 2025. From large infrastructure investments to concerns about how concentrated the market has become in certain stocks, AI emerged as a significant driver of economic growth and market returns. The Magnificent 7 stocks—a group of seven large technology companies—now make up about one-third of the S&P 500. This creates concentration risk, meaning most investors have exposure to these stocks whether they know it or not. Understanding this when building investment strategies and financial plans will become increasingly important.
Second, tariff policy created uncertainty but had less economic impact than many expected. Tariffs on imported goods increased significantly for many trading partners, yet the feared economic consequences mostly didn’t happen. This occurred because companies adjusted their operations, tariffs were paused or reduced, and consumer spending stayed strong. For investors, this shows that the results of policy changes in Washington—whether related to trade or federal finances—don’t always have a clear effect on the economy or markets.
Third, many different types of investments performed well in 2025. International stocks outperformed U.S. markets, partly due to the decline in the U.S. dollar’s value. Bonds generated strong returns and have nearly recovered their losses from 2022. Other individual investments including gold also had record years. Benefiting from all these different types of investments is less about picking individual investments, and more about having the right asset allocation—meaning the right mix of different investment types—that can take advantage of opportunities while managing sources of risk.
The bottom line? The year 2025 was strong for investors. While we can appreciate a good year in markets, it reinforces the importance of staying disciplined with investments. Investors should continue to apply this lesson to their investment and financial plans for the year ahead.
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