01/05/2026
2025 was another great year in the market with the S&P 500 finishing the year +16%. This follows up on the back of two strong years in 2023 and 2024 as well. It has been a great three-year run for investors!
The stock market ended 2025 with solid gains, driven largely by progress on inflation and a shift in interest rate policy. As inflation continued to ease, the Federal Reserve gained confidence that prior rate hikes had done their job, allowing policymakers to begin cutting rates later in the year. Lower interest rates supported stock valuations and improved investor sentiment, particularly in growth-oriented areas of the market that benefitted from AI.
Ongoing discussions around potential tariffs raised concerns, leading to periods of market volatility during the year. However, tariffs did not derail the market's overall performance. They served as a reminder that policy decisions can have a meaningful impact on investor confidence. Overall, 2025 was a year shaped by macroeconomic forces, with inflation, interest rates, and trade policy playing a central role in market behavior.
2026 will be an interesting year for investors as we move into a lower interest rate environment and begin to see how AI affects businesses and ultimately the economy as a whole.
