U.S. equity markets capped 2025 with double-digit gains for the third year in a row, witnessing one of the most rapid recoveries on record after approaching the precipice of bear market territory in early April. Regardless of the poor prospects of a Santa Claus rally, the S&P 500® gained 18% and posted 39 record closing highs, amid geopolitical, tariff and inflation-related tensions coupled with a government shutdown and labor market concerns.
The market’s comeback was powered by mega-cap strength and unrelenting AI-related optimism, with the S&P 500 Top 50 up 20%. Enthusiasm for Fed rate cuts also propelled the rally to broaden towards mid and small-caps. The S&P MidCap 400® and S&P SmallCap 600® gained 8% and 6%, respectively, though underperforming their large-cap peers for the third consecutive year.
All large-cap sectors ended 2025 higher, led by Communication Services and Information Technology, up 34% and 24%, respectively.dashboard-us-2025-12
