Markets in New York closed 2025 with the S&P 500 set to record a rare third consecutive year of double-digit returns, marking an unusually strong stretch that has occurred only a handful of times since the 1940s. The index is projected to finish the year up about 17%, following gains of 23% in 2024 and 24% in 2023. That performance came amid tariff disputes, geopolitical flare-ups, concerns about a valuation bubble and the longest U.S. government shutdown on record — yet corporate profits, enthusiasm about artificial intelligence and expectations for Federal Reserve rate cuts powered the rally.
Key Takeaways
- The S&P 500 is on track for roughly a 17% gain in 2025 after rising 23% in 2024 and 24% in 2023, a three-year streak of double-digit returns.
- The Dow Jones Industrial Average rose about 13.7% in 2025, recovering from an April trough below 37,000 to surpass 48,000 by year-end.
- The Nasdaq Composite led with an estimated 21% gain in 2025, driven by tech and AI-related stocks and marking the best performance among the major U.S. indexes for the third straight year.
- Volatility spiked in April and again in June—VIX reached levels not seen since the Covid-19 pandemic—before settling later in the year.
- The 10-year Treasury yield fell from 4.57% to 4.12% in 2025, while the 30-year yield ended near 4.8%; falling long-term yields helped support equity valuations.
- The dollar index declined about 9.5% in 2025, its worst year since 2017, amplifying returns for non-dollar assets and overseas equities.
- Commodities diverged: gold surged roughly 66% (trading near $4,355 after a peak above $4,500), silver jumped about 164%, and copper rallied ~43%, while U.S. crude dropped ~18% to $58 a barrel.
Background
Extended stretches of double-digit annual returns for a broad index like the S&P 500 are historically uncommon. CFRA Research notes that three consecutive double-digit years has occurred only five times since the 1940s, and a few of those streaks continued even longer into four- and five-year runs. That rarity is why investors and strategists flagged the 2023–25 run as notable rather than routine.
The current rally traces its roots to a resurgence in technology leadership after October 2022, when breakthroughs in generative AI began reshaping expectations for corporate productivity and earnings. At the same time, the U.S. political and policy backdrop created episodic risk: tariff proposals introduced in the spring, a prolonged government shutdown and high-profile geopolitical tensions produced sharp but transitory swings in sentiment.
Main Event
The year began on the heels of the S&P’s strongest back-to-back yearly performance since the 1990s, and optimism about AI and profit growth set a bullish tone. Equity markets fell sharply in late January amid worries triggered by a rival AI product launch, yet the sell-off was short-lived as investors refocused on the durability of U.S. corporate earnings and potential AI leadership among American firms.
Volatility returned in the spring when an administration trade plan proposing broad tariffs unnerved markets and roiled global bond and equity desks. Stocks rebounded after the most severe tariff measures were scaled back, and both the S&P 500 and Nasdaq hit fresh highs in late June. The Dow posted a series of record milestones through August and into the autumn, climbing from roughly 43,000 at the start of the year to trade above 48,000 by year-end.
Monetary dynamics helped sustain the rally. As markets priced in Federal Reserve rate cuts and a cooling labor market, long-term Treasury yields fell, which tended to increase the relative attractiveness of equities versus fixed income. At the same time, commodity and currency moves—particularly a declining dollar—amplified returns for non-dollar assets and international equities.
Analysis & Implications
A third straight year of double-digit returns increases scrutiny on valuations and the sources of equity gains. Part of the advance reflects concentrated strength in large-cap technology and AI-related names, raising questions about breadth: if leadership narrows, the market could be more sensitive to idiosyncratic shocks. Still, robust corporate earnings helped justify much of the 2025 rally, reducing the extent to which gains looked purely speculative at midyear.
Lower 10-year yields (from 4.57% to 4.12%) reduced discount rates used in equity valuation models, supporting higher price-to-earnings multiples. That dynamic makes equities more resilient even as inflation concerns persist; the 30-year yield edging to 4.8% signals that some inflation risk and duration premium remain priced into long maturities. For mortgage holders and borrowers, the easing in 10-year yields offered modest relief on long-term borrowing costs.
The surge in gold and other precious metals—gold up about 66%, silver up roughly 164%—reflects investor demand for hedges against currency depreciation, policy uncertainty and potential inflation surprises. Such dramatic commodity moves can reshape corporate cost structures (for firms using metals) and influence central-bank and fiscal policy choices if they feed into consumer prices.
Internationally, the U.S. dollar’s roughly 9.5% decline boosted returns abroad; South Korea’s Kospi jumped about 76% and Japan’s Nikkei rose about 26% in 2025. Currency effects mean U.S.-based investors with foreign holdings benefited doubly from local equity gains and dollar weakness, complicating cross-border performance attribution.
Comparison & Data
| Asset | 2023 | 2024 | 2025 (est.) |
|---|---|---|---|
| S&P 500 | +24% | +23% | +17% |
| Nasdaq Composite | — | — | +21% |
| Dow Jones | — | — | +13.7% |
| Gold futures | — | — | +66% |
| Silver | — | — | +164% |
| Bitcoin | — | — | ~−6.6% (ending ~$88,000) |
The table condenses the multi-asset story: stocks and selective commodities posted sizable gains in 2025, while cryptocurrency finished the year lower from its mid-October peak. Readers should note that some 2025 figures are year-to-date estimates and rounding is applied for clarity.
Reactions & Quotes
Equity markets are ending the year on a high note, with AI momentum and a resilient economy helping drive generous returns.
Craig Johnson, Chief Market Technician, Piper Sandler (investment bank)
Johnson’s comment highlights the technical and thematic drivers traders cite for the rally—momentum in AI names and underlying profit growth. Market technicians point to trend strength and record-high breadth within leading sectors as evidence of sustained buying pressure.
Three consecutive double-digit years are uncommon in the S&P’s modern history; only a few prior streaks extended beyond three years.
Sam Stovall, Chief Investment Strategist, CFRA Research (investment research firm)
Stovall’s historical framing helps investors calibrate the rarity of the current run and weigh the odds of mean reversion versus continued expansion. Analysts use such histories to model downside scenarios and to stress-test portfolios.
Silver was the undisputed champion of 2025, lifted by both investor demand and industrial uses such as solar and EV components.
Luke Rahbari, CEO, Equity Armor Investments (investment manager)
That observation underscores the dual demand drivers for some metals—financial hedging and durable industrial consumption—which can sustain prices beyond short-term speculative cycles.
Unconfirmed
- Attribution that a single AI product launch in January fully caused the market dip is not definitively established; multiple factors likely contributed.
- Some narratives about the administration’s tariff motivations and precise timing of rollbacks remain subject to political interpretation and were not confirmed by a single authoritative source in the public record.
- Estimates of peak intraday crypto valuations in October vary across exchanges and reporting services; the $126,000 high is based on consolidated market reports but may differ by venue.
Bottom Line
The U.S. equity market delivered an unusually strong run through 2025, driven by a combination of concentrated tech and AI leadership, solid corporate earnings and more favorable interest-rate expectations. That mix helped the S&P 500 complete a rare third consecutive year of double-digit returns, but the narrowness of leadership and elevated valuations warrant continued monitoring by investors and risk managers.
Looking ahead, the main variables to watch are Federal Reserve actions, the earnings trajectory of AI-exposed firms, the durability of commodity rallies (especially precious metals), and any renewed geopolitical or trade disruptions that could spike volatility. For prudent investors, scenario planning that includes both growth and reversal outcomes will be essential as markets begin 2026 under heightened attention.