Yahoo Finance·2025-12-31 21:00Market Performance - The S&P 500 rose over 16% in 2025, marking its sixth year of 15%-plus gains over the past seven years [2] - The Nasdaq Composite increased by 20%, while the Dow Jones gained approximately 13% [2] - Stocks fell around 0.7% in the final trading session of 2025, dimming hopes for a Santa Claus rally [1] Sector Performance - Tech and Consumer Discretionary stocks were the primary drivers of gains in 2025, fueled by optimism surrounding AI [2] - Alphabet outperformed the "Magnificent 7" group with a 65% rise, while Nvidia followed with a 39% increase [2] Market Challenges - The Nasdaq briefly entered a bear market over eight months ago, and the S&P was close to one due to significant tariffs imposed by President Trump [3] - Concerns over tariffs, geopolitical developments, and the health of the US economy contributed to market volatility [4] Future Outlook - Wall Street forecasters predict a continued stock rally for a fourth consecutive year in 2026, despite existing risks such as potential faltering of the AI boom and economic surprises [4] - The Federal Reserve's interest rate path remains a focus, with expectations that the current rates will be held steady in January [5]