S&P 500 Caps 2025 With Third Straight Double-Digit Annual Gain
The benchmark index finishes up 17% for the year, marking just the fifth time since 1940 that stocks have posted three consecutive years of double-digit returns.
The S&P 500 is closing out 2025 with a 17% gain. That makes three consecutive years of double-digit returns—a streak so rare it's only happened five times since the 1940s.
The final trading day of 2025 finds markets in a reflective mood. Futures pointed to a slightly lower open, with Dow futures off 35 points and S&P futures down 0.1%. But the year-end numbers speak for themselves.
The Final Tally
The S&P 500 will finish 2025 around the 6,900 level, up from roughly 5,900 at the start of the year. The 17% gain follows a 23% advance in 2024 and a 24% jump in 2023.
The Nasdaq Composite did even better, rising 21% on continued enthusiasm for AI-related stocks. The Dow lagged at 13%, held back by its lack of exposure to the technology names that drove the rally.
For the Dow, December marks an eighth consecutive winning month—the first such streak since 2018. The S&P 500 is also on pace for its eighth positive month in nine.
Alphabet Led the Magnificent Seven
Not all of the megacaps performed equally.
Alphabet finished as the best performer among the so-called Magnificent Seven, gaining nearly 66% for the year. The company benefited from AI integration across its search and cloud businesses, though it faced renewed regulatory pressure.
Nvidia remained the standout AI play, becoming the first company to cross $5 trillion in market cap before retreating in December. Tesla rallied sharply in the second half on autonomous driving progress but trades at nosebleed valuations.
Apple and Microsoft gained more modestly, while Meta continued its recovery from 2022's lows.
What Drove the Rally
Three themes defined 2025.
First, AI investment accelerated. Companies poured billions into data center capacity, driving demand for chips, power infrastructure, and cloud services. The buildout is far from complete, and Wall Street continues to price in years of growth.
Second, the Fed pivoted. After pausing for most of 2024, the central bank delivered three rate cuts totaling 75 basis points. The December cut brought the fed funds rate to 3.50%-3.75%, the lowest since 2022.
Third, the economy refused to break. Consumer spending held up despite higher rates. Unemployment stayed below 4.5%. GDP growth ran above trend. The soft landing that seemed improbable a year ago became the base case.
The April Scare
The rally wasn't a straight line.
In early April, President Trump's sweeping tariff announcement triggered a selloff that brought the S&P 500 within a whisker of bear market territory. The index dropped nearly 19% from its February high, testing investor resolve.
Markets stabilized as trade tensions eased and the Fed signaled support. The recovery from those April lows added to annual gains, with the S&P 500 hitting fresh records by December.
That volatility is worth remembering. The 17% annual gain obscures a drawdown that would have felt severe in real time.
Gold and Silver Outperformed
Precious metals stole the show.
Gold futures surged 66% in 2025—the metal's best year since 1979. Prices topped $4,500 per ounce in December, driven by central bank buying and geopolitical uncertainty.
Silver did even better, more than tripling to briefly touch $81 before pulling back. Industrial demand from solar panels and EVs combined with tight supply to produce extraordinary gains.
Both metals outperformed every major equity index.
Looking to 2026
Wall Street strategists are cautiously optimistic.
Several firms have set S&P 500 targets around 8,000 for year-end 2026, implying another 15% upside from current levels. The bulls cite continued AI spending, potential for further Fed cuts, and corporate earnings growth.
The bears point to stretched valuations. The S&P 500 trades at roughly 22 times forward earnings—above historical averages. Any disappointment on earnings or rates could trigger a correction.
The Fed remains a wildcard. The December minutes revealed deep divisions within the FOMC, with officials split on whether to cut further in 2026. Market pricing suggests just one or two additional reductions.
The Historical Context
Three consecutive double-digit years puts 2023-2025 in rare company.
The only comparable streaks occurred in 1942-1945, 1963-1965, 1995-1999, and 2012-2014. Each followed a period of difficulty and coincided with economic expansion.
History doesn't repeat, but it rhymes. The question for 2026 is whether this streak extends or mean reversion takes hold.
For now, 2025 belongs to the bulls. The S&P 500's third consecutive double-digit year is in the books.