Despite a year of economic uncertainty, the US stock market has ended 2025 near record highs, buoyed by a sustained rise in tech stocks. The benchmark S&P 500 index rose 16.4% over the course of the year, closing at 6,845.50 on New Year’s Eve in New York, as investors largely shrugged off geopolitical concerns.
The tech-focused Nasdaq Composite rallied 20.5% during 2025, driven by enormous interest in the potential of artificial intelligence (AI). Nvidia, the top chipmaker, made history this summer by becoming the first public company to scale a $4 trillion market value, with its stock price increasing by 34.8% over the year.
The strength of the tech sector has overshadowed other economic challenges faced in 2025, including the longest US government shutdown in history, persistent inflation, and a hiring slowdown. While President Trump’s aggressive trade policies initially spooked investors, a stubborn cynicism around the “Taco” trade (Trump Always Chickens Out) ultimately prevailed.
Analysts remain relatively optimistic about the market’s prospects for 2026, expecting the tech-led rally to continue. However, the stock market’s gains have disproportionately benefited the wealthy, leading some economists to refer to a “K-shaped economy” that is deepening inequality and leaving those without investment portfolios feeling left behind.
Despite the strong performance of the US stock market, many Americans remain apprehensive about the economic outlook, with twice as many believing their financial security is getting worse than better, according to a Harris poll for The Guardian.
