The U.S. stock market had a rocky start to the year, thanks to tariffs and Trump's fight with the Fed. But it's ending on a high note

Market Performance - The S&P 500 index funds returned over 18% in 2025, marking their third consecutive year of significant returns [2] - Despite initial fears from tariff announcements, the market rebounded, aided by strong profit reports and three interest rate cuts by the Federal Reserve [5] Tariff Impact - Trump's unexpected tariffs in April led to a nearly 5% drop in the S&P 500 on April 3, followed by a 6% drop the next day due to fears of a trade war with China [3] - The tariffs also caused a decline in the U.S. dollar and affected the U.S. Treasury market [3] Federal Reserve Relations - Trump's lobbying for lower interest rates created tension, as the Fed traditionally operates independently from political influence [6] - The Fed maintained steady rates through August despite inflation concerns, which drew criticism from Trump [7] Global Market Trends - Foreign markets outperformed U.S. stocks, with South Korea's KOSPI experiencing its largest gain in over two decades, driven by technology investments [11] - Japan's Nikkei 225 and Germany's DAX also saw double-digit gains, supported by national elections and stimulus plans [12] Cryptocurrency Developments - Bitcoin experienced volatility, initially dropping due to trade policy fears but later rebounding as support for digital assets grew [14][15] - Bitcoin peaked at around $125,000 in early October but fell to approximately $89,400, down 28% from its peak [16] Future Outlook - Analysts expect S&P 500 earnings per share to rise by 14.5% in 2026, an acceleration from the 12.1% growth estimated for 2025 [17] - Concerns remain regarding the profitability of investments in artificial intelligence technology, which may affect stock prices [18] - Strategists at Vanguard predict U.S. stocks may yield annualized returns of only 3.5% to 5.5% over the next decade [19]