Stocks pull lower at end of record year for markets
FILE - Specialist Michael Pistillo works on the floor of the New York Stock Exchange, Tuesday, July 8, 2025. (AP Photo/Richard Drew, File)
NEW YORK: Stock markets mostly retreated on Wednesday (Dec 31) in thin trading, following a year of record gains for key assets as central banks cut interest rates and the tech sector boomed thanks to the growth of artificial intelligence.
Wall Street's main indices dipped to close the final trading day of 2025, with little fresh economic data apart from a drop in both first-time and continuing claims for jobless benefits in recent weeks.
Still, all three indices logged solid gains for the full year.
The Dow added 13 per cent in 2025, the broad-based S&P 500 advanced 16.4 per cent and the tech-focused Nasdaq Composite surged 20.4 per cent over the year.
"Generally speaking, 2025 was a spectacular year for equities," said Briefing.com analyst Patrick O'Hare.
Across the globe, stock markets struck record highs and enjoyed double-digit gains in 2025, thanks in large part to interest rate cuts from the US Federal Reserve following drops in inflation.
London's benchmark FTSE 100 index jumped more than 21 per cent in 2025 - the biggest gain for 16 years.
Frankfurt rallied 23 per cent in 2025, while Paris saw an annual gain of more than 10 per cent.
In Asia, Seoul stocks rocketed 75 per cent higher, while Hong Kong's Hang Seng index jumped 28 per cent, and Tokyo's Nikkei 225 won more than 26 per cent.
"To push meaningfully higher in 2026, equities will need confirmation that the Fed can deliver at least the two rate cuts still priced by the market, with growth unimpeded," noted Stephen Innes of SPI Asset Management.
Minutes of the Fed's policy meeting in December, which were released on Tuesday, indicated that most of its officials see future rate cuts as appropriate, should inflation cool over time as expected.
A surge in the tech sector on the back of the vast amounts of cash pumped into AI also helped push stocks to record highs, but concerns that valuations of AI stocks are too high gnawed at investors late in 2025.
AI chip juggernaut Nvidia became the world's first US$5 trillion company at the end of October, while its current worth stands at around US$4.5 trillion.
The price of gold, seen as a safe-haven investment, scored multiple record highs this year.
The precious metal has benefitted from weakness to the dollar caused by the Fed's rate cuts and economic growth concerns triggered by President Donald Trump's tariffs war.
On Wednesday, the price of silver slid further, having struck record highs in December.
Oil prices have retreated nearly 20 percent over the year, pressured by an oversupplied market.
Bitcoin, emphasising the volatile nature of the cryptocurrency sector, soared to a record high above US$126,000 in October before ending the year around US$88,000.
