A Calm Finish To A Wild Year: Markets End 2025 Without A Santa Rally

Core Insights - The year-end rally for stocks has been disappointing, with the SPDR® S&P 500 ETF Trust (SPY) returning only 1% in December and the Nasdaq 100 ETF (QQQ) finishing flat [1] - US large caps outperformed small and mid-cap peers with an 18% return for the year, but lagged behind international equity markets [1] Market Performance - The Russell 2000 ETF (IWM) experienced a fractional decline in December, while the Vanguard FTSE All-World ex-US ETF (VEU) returned nearly 3% [2] - The Aggregate Bond ETF (AGG) remained close to unchanged, and the US Dollar ETF (UUP) decreased by 1% [2] - WTI Crude Oil ETF (USO) and Bitcoin ETF (IBIT) fell between 2% and 4%, while gold surged over 60% in 2025, marking its best year since 1979 [2] Sector Performance - In December, five out of eleven S&P 500 sector ETFs were negative, with Utilities (XLU) being the primary drag due to higher long-term interest rates and a cooling AI trade [4] - Financials led the S&P 500 sector performance with a 4% increase, followed by Communication Services with a 3% gain, and comparable increases in Materials (XLB), Industrials (XLI), and Consumer Discretionary (XLY) [3]