Investors are anticipating a strong finish for the US stock market as 2025 comes to a close, with major indices trading near record levels and approaching new milestones. The S&P 500 recently recorded an all-time high and is hovering around the 7,000 mark, while the Nasdaq Composite has also seen significant gains, buoyed by a three-year-old bull market driven largely by the technology sector.

Despite early-December turbulence sparked by concerns over technology spending on artificial intelligence, equities have rebounded, setting the stage for a potential eighth consecutive month of gains for the S&P 500—its longest winning streak since 2017–2018. Other market segments, including financials, transports, healthcare and small-cap stocks, have also posted solid returns in recent weeks, reflecting a rotation towards areas with more moderate valuations.

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The Federal Reserve’s recent policy decisions remain a key focus for investors heading into 2026. After cutting benchmark rates by 75 basis points over three meetings in 2025 to reach a range of 3.50%–3.75%, market participants are closely watching the timing and magnitude of any future rate cuts. Differing projections among Fed policymakers have added uncertainty, and upcoming minutes from the December meeting may provide additional insights into the central bank’s outlook.

Markets are also attentive to the potential nomination of a new Fed chair to replace Jerome Powell when his term ends in May 2026, as any developments could influence trading dynamics. Year-end portfolio adjustments and lighter holiday trading volumes are expected to contribute to short-term volatility.

Overall, US equities have delivered strong returns in 2025, with the S&P 500 up nearly 18% and the Nasdaq Composite gaining around 22% for the year, Reuters said in a report. While technology stocks have faced recent challenges, other sectors have driven market resilience, highlighting investors’ confidence in the economy’s underlying strength as it enters the new year.