Recent Markets: Q4 2025
2025 proved to be an extraordinary year, both for investors and the economy. Sweeping tariffs, a cooling labor market, rising consumer prices, a prolonged U.S. federal government shutdown, turmoil in the Middle East, and the ongoing Russia/Ukraine war were among some of the many factors that should have signaled economic contraction and a downturn in the stock market. Yet, the opposite occurred.
Stocks around the world surged. The U.S. market finished the year up roughly 16% and the foreign markets gained about twice that. Precious metals had even bigger returns with gold up more than 60% and silver up about 145%. Bonds also enjoyed solid positive returns, with intermediate U.S. bonds generally up 7%. Even savers saw returns that exceeded inflation, with money market funds earning just over 4%. All in all, it was a very good year for investors.
On the economic front, global economies held up quite well in spite of what could have been a disastrous trade war. Many of the threatened tariffs never materialized as “trade deals” were reached with several trading partners, and some tariffs were postponed or eliminated. The U.S GDP increased at its fastest pace in two years during the third quarter, even as the labor market slowed with unemployment rising to 4.6%.
As we begin 2026, there is no shortage of potential distractions that could cause volatility in the markets.
The year started with heightened geopolitical headlines when President Trump announced Venezuelan President Nicolas Maduro was captured during a large-scale U.S. strike and transported to New York to face drug trafficking and narco-terrorism charges. Despite this, stocks around the world shrugged off the news with solid returns.
The U.S. economy appears resilient, but some investors are concerned about sticky inflation, the labor market, immigration shocks, and a potential government shut down later this month. Then for many, stock valuations look rich. Companies in the S&P 500 are trading at 22 times their expected earnings over the next 12 months, above their 10-year average of about 19 times.
While investor concerns will continue to shift as news unfolds, the principles of successful investing do not. We believe that those who approach their strategy with intention, structure, and patience will be better positioned to reach their goals and build long-term wealth.
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Past performance does not guarantee future results. Nothing contained in this communication may be relied upon as a guarantee, promise, assurance, or representation as to the future. Market conditions can vary widely, and market and economic events having a positive impact on performance may not repeat. No diversification or asset allocation strategy can eliminate investment risk, losses, or protect against loss in declining markets. All investments involve risk including loss of principal. Investing in fixed income securities (bonds) involves interest rate risk, credit risk, and inflation risk. Investing in stocks involves volatility risk, market risk, business risk, and industry risk. International investing involves additional risks including, but not limited to, changes in currency exchange rates, differences in accounting and taxation policies, and political or economic instabilities which can increase or decrease returns. Investors should consider the objectives, risks, and charges and expenses of an investment carefully before investing.
Any index or benchmark included is for illustration purposes. Indexes are unmanaged baskets of securities that investors cannot directly invest in. They do not reflect the deduction of fees or expenses and assume the reinvestment of dividends and other income. The Dow Jones Industrial Average (DJIA) is Composed of 30 “Blue-Chip” US Stocks. THE DOW and DOW JONES INDUSTRIAL AVERAGE are registered trademarks of Dow Jones Trademark Holdings LLC (“Dow Jones”). The S&P 500 Index measures the performance of large-capitalization U.S. stocks. It is an unmanaged market value-weighted index of 500 stocks that are traded on the NYSE, AMEX, and NASDAQ. The weightings make each company’s influence on the index performance directly proportional to that company’s market value. S&P 500 is a registered trademark of Standard and Poors Corporation a division of McGraw-Hill Companies, Inc.