US stocks rose again in 2025 after overcoming turbulence from tariffs and Trump's fight with the Fed

Market Performance - The S&P 500 index funds returned more than 18% in 2025 through December 11, marking a record high and the third consecutive year of significant returns [2] - The U.S. stock market experienced historic drops due to concerns over tariffs, interest rates, and potential bubbles in artificial intelligence technology [1] Tariff Impact - President Trump's announcement of severe tariffs on "Liberation Day" in April triggered fears of a recession and inflation, leading to a nearly 5% drop in the S&P 500 on April 3, followed by a 6% decline the next day due to China's retaliatory threats [3] - The tariffs affected not only the stock market but also led to a decline in the value of the U.S. dollar and created unease in the U.S. Treasury market [3] Federal Reserve Actions - Trump paused the tariffs on April 9 after observing instability in the U.S. bond market, which alleviated some investor concerns [4] - The Federal Reserve's three interest rate cuts during the year contributed to a positive market environment, alongside strong corporate profit reports and enthusiasm for artificial intelligence technology [5] - Trump's personal lobbying for lower interest rates marked a significant departure from the traditional independence of the Federal Reserve, which typically makes decisions without political influence [6]