Wall Street ended 2025 lower after three straight years of double-digit gains
（Singapore,
01.01.2026）Global
financial markets ended the final trading day of 2025 on a weaker note, with
stocks, bonds and precious metals all slipping, even as investors wrapped up
another year of solid overall gains. The late-year pullback did little to erase
what has been a strong three-year run for equities, powered largely by optimism
around artificial intelligence and a more supportive interest-rate environment.
In the United States, major stock indexes fell for a fourth
straight session following the Christmas holiday. The S&P 500 trimmed its
gains for the year to about 16%, while the Nasdaq 100 dropped 0.8% on
Wednesday. Despite the late weakness, both indexes still recorded double-digit
gains for the third consecutive year, marking their longest winning streak
since 2021.
Market participants said the year-end slowdown reflected
profit-taking and caution rather than any sudden shift in fundamentals.
Throughout 2025, investors navigated a wide range of challenges, including
volatile geopolitics, shifting trade policies, stubborn inflation pressures and
uncertainty over the pace of central bank rate cuts.
Even so, the resilience of the US economy stood out.
“Calling 2025 resilient might actually understate it,” said
Adam Turnquist, chief technical strategist at LPL Financial. He noted that
growth held up despite higher inflation, a cooling labor market, fewer
interest-rate cuts than originally hoped for, and rising tariffs. Importantly,
the economy avoided a recession even as financial conditions tightened at
times.
According to a Bloomberg report, precious metals also ended
the year lower, with gold and silver slipping on the final trading day after
delivering their strongest annual performance since the 1970s. Recent
volatility prompted CME Group to raise margin requirements on precious-metal
futures for the second time in a week, increasing trading costs for investors.
In the bond market, US Treasuries recorded their best annual
returns since 2020, supported by easing inflation concerns and expectations
that interest rates have peaked. However, prices edged lower on Wednesday,
pushing the benchmark 10-year Treasury yield up to 4.17%.
Economic data released late in the year showed continued
strength in the US labor market. Weekly jobless claims fell to one of the
lowest levels seen in 2025, with initial applications dropping to 199,000 in
the week ended December 27, well below economists’ expectations. The data had
little immediate impact on markets, as investors remained focused on the
outlook for 2026.
The US dollar was mostly unchanged on the day but finished
2025 with its weakest annual performance since 2017. Analysts said the
greenback could face further pressure if the next Federal Reserve chair opts
for deeper interest-rate cuts than markets currently anticipate.
Oil Slides as Oversupply Concerns Dominate
Oil prices followed a very different path, falling again on
the final day of the year and sealing their steepest annual decline since 2020.
Brent crude dropped nearly 19% in 2025, while US West Texas Intermediate crude
fell almost 20%. Brent settled at US$60.85 a barrel, while WTI closed at
US$57.42.
The losses came despite a year marked by wars, sanctions and
shipping disruptions. Instead, expectations of oversupply weighed heavily on
prices. Rising output from the United States and OPEC+ producers pressured the
market, with US oil production hitting a record high in October. OPEC+ has
released about 2.9 million barrels per day into the market since April.
BNP Paribas analyst Jason Ying expects Brent crude to dip to
around US$55 a barrel in the first quarter of 2026 before stabilising near
US$60 later in the year. He noted that US shale producers have been able to
hedge production at higher prices, making supply less sensitive to market
swings.
Recent US inventory data showed mixed signals. While crude
stockpiles declined more than expected, gasoline and distillate inventories
rose sharply, pointing to softer demand after the holiday season.
“It will probably be a rough January and February,” said
John Kilduff of Again Capital Markets, citing seasonal demand weakness.
As markets turn the page to 2026, analysts are urging
caution. Historically, the first trading day of the year has delivered mixed
results. Since 1953, the S&P 500 has recorded a median decline of 0.3% on
the first trading day, and stocks have opened lower in each of the past three
years.
For oil, most forecasters expect supply to exceed demand in
2026, though geopolitical risks remain a key wildcard. OPEC+ has paused further
output increases for the first quarter, with its next meeting scheduled for
January 4.
According to Reuters, despite market fundamentals suggesting
ongoing pressure, analysts warn that political and geopolitical factors could
still sway prices.
“Everybody’s saying it will get weaker into 2026,” said John
Driscoll of JTD Energy. “But geopolitics still matter, and the Trump factor is
going to be in play.”
After a turbulent but ultimately rewarding year, investors
head into 2026 facing familiar questions — whether growth can hold up,
inflation will stay contained, and volatility will once again test market
confidence.