A year of ups and downs has finally come to a close, but where's the traditional Santa Rally we've come to expect? It's a question that's been on many investors' minds, as the market's year-end performance has been anything but festive.
Let's dive into the numbers. The SPDR S&P 500 ETF (SPY) delivered a modest 1% return in December, while the Nasdaq 100 ETF (QQQ) remained flat. For the entire year, US large caps grew by a respectable 18%, outperforming their smaller counterparts but falling short of international equity markets.
But here's where it gets interesting... The Russell 2000 ETF (IWM) ended the year on a slightly negative note, while the Vanguard FTSE All-World ex-US ETF (VEU) shone with a 3% return. In the bond market, the Aggregate Bond ETF (AGG) remained relatively unchanged.
The US Dollar ETF (UUP) saw a 1% decline, while WTI Crude Oil and Bitcoin ETFs (USO and IBIT, respectively) dropped by 2-4%. Gold, however, was the star of the show, soaring by over 60% in 2025 - its best performance since 1979. Silver followed suit with an even more impressive gain.
International markets led the way in December, with the SPY barely budging. Gold's surge was a standout, while stocks generally rose, and oil, Bitcoin, and the dollar all took a hit.
And this is the part most people miss... The best-performing S&P 500 stock in 2025 was WDC, with a massive 278% gain, while TTD took the worst spot, dropping by 68%. Silver stole the show in the precious metals category.
When comparing US stocks to their international counterparts, it was the worst year since 2009. But for diversified investors, it was the best year since the same period.
Diving deeper into the S&P 500 sector ETFs, Financials took the top spot with a 4% gain. Communication Services, Materials, Industrials, and Consumer Discretionary sectors also saw notable increases. However, five out of the eleven sectors ended December in the red, with Utilities (XLU) being the primary culprit, possibly due to rising long-term interest rates and a cooling off of the AI trade.
So, what's the takeaway? The market's performance in 2025 was a mixed bag, with some sectors and asset classes thriving while others struggled. As we head into 2026, early signs point to continued strength in equities, but midterm election risks and sector divergences should keep investors cautious.
What are your thoughts on the market's performance and the outlook for the coming year? Do you think the Santa Rally will make a comeback, or is this a new normal? Feel free to share your insights and predictions in the comments below!
