Year-end stock market reflections: 5 lessons learned in 2025

Anthony Saglimbene, Chief Market Strategist – Ameriprise Financial 

December 15, 2025

2025 has served as a powerful reminder that financial markets are dynamic and often unpredictable. While the year began with record highs and ended on a strong note, the journey in between offered several crucial lessons. 

Here are five key lessons that investors can take away from the market's performance in 2025. 

1. Market leadership can be tested 

The year began with major U.S. stock averages perched near record highs and basking in the afterglow of a strong 2024. Yet, as winter gave way to spring, investors’ mood shifted rather suddenly. Big Tech and AI firms, the market’s undisputed leaders since the 2022 bottom, came under sharper scrutiny as concerns about valuation and earnings growth rose.  

Notably, the first quarter saw a meaningful reset in expectations and stock prices, as investors digested the reality that even the most dominant investing themes can face temporary bouts of doubt. Simply, investors began to question if the pace of profit growth and capital expenditures in Big Tech justified elevated valuations, particularly in a world of increasing tariffs and growing economic uncertainty. 

Bottom line: 2025 served as a reminder of the importance of portfolio diversification and the risks of being overly concentrated in a single sector. 

2. Staying the course can pay off 

Uncertainty around tariff implementation was among the top market disrupters in 2025. Specifically, the “Liberation Day” tariffs, announced in April, triggered the worst two-day stock selloff since the pandemic, and volatility spiked as investors scrambled to reevaluate asset prices. As a result, the S&P 500 Index flirted with bear market territory in April, and the NASDAQ Composite briefly entered one. 

Nevertheless, the U.S. market and economy showed incredible resilience as a 90-day tariff reprieve, along with the exclusion of key tech products from the most aggressive levies, helped stabilize sentiment. By mid-spring, stocks staged a historic rebound, with the S&P 500 posting one of its largest single-day gains on record. The subsequent months saw a steady recovery, as U.S. trade negotiations with China and other key trading partners calmed earlier tariff fears. 

Bottom line: Patient investors who avoided making rash decisions during 2025’s pullback were rewarded as sentiment stabilized. When volatility arises, tune out the noise and focus on your long-term investment strategy. 

3. Amid elevated valuations, be selective  

Earnings growth and multiple expansion helped U.S. stocks advance higher as the year progressed. Big Tech and AI-related companies continued to deliver robust profit growth through the third quarter, with key Magnificent Seven companies reaffirming their strong outlooks.  

However, the valuation gap between these leaders and the rest of the market began to narrow, as profit growth broadened across more sectors of the economy. Retailers and other tariff-sensitive industries flagged cost pressures, but overall S&P 500 earnings beat expectations by a wide margin over the first three quarters of the year, and management teams generally struck a constructive tone regarding their outlooks. 

Bottom line: Elevated valuations underscore the importance of focusing on economic and corporate fundamentals to identify growth opportunities. 

4. Don’t underestimate the Fed’s impact 

In our view, the Federal Reserve’s policy stance was another key driver of market strength in 2025. After a period of “stand-pat” policy, the Fed pivoted toward easing the fed funds rate as inflation pressures moderated and labor markets softened, cutting rates by 25 basis points each in September, October and December, while also signaling a slower but still lower rate path in 2026. This shift helped support both stocks and bonds in the back half of the year. 

Bottom line: Easing monetary policy can provide a supportive tailwind for asset prices, presenting unique opportunities for investors in the equity and fixed income spaces.  

5. The AI investment theme is here to stay 

In 2025, the market narrative was dominated by a handful of themes, the most significant being enthusiasm for investment in AI infrastructure and technology. And while there’s growing concern around spending, monetization and adoption, the theme demonstrated remarkable durability throughout the year. In fact, the potential of, and demand for, AI technology were among the key drivers of stock market gains in 2025.  

Short-term, investors may want to brace for the potential of volatility if elevated profit expectations pressure AI stocks, but long-term, the picture for AI-related companies looks bright. 

Bottom line: In our view, the fundamentals behind the AI investing theme remain very strong and durable.  

Looking ahead to 2026 

2025 was a year that rewarded investor discipline, selectivity and a willingness to look through temporary disruptions. As we look ahead to 2026, we anticipate continued opportunities and challenges that will require investors to remain laser-focused on key factors, including the pace of economic growth, the direction of policy and strength in corporate profitability.  

Specifically, we’ll be looking for answers to the following questions: 

• Can Big Tech and other industries turn AI investments into stronger profit growth and/or unlock greater productivity and efficiencies?  
• More broadly, will corporate earnings do enough of the heavy lifting to maintain elevated stock valuations after three years of double-digit returns in the S&P 500? 
• Can the Fed normalize rate policy without reigniting inflation? 
• Will trade policy stabilize, or are further surprises in store?  

Importantly, the investment backdrop entering 2026 remains on firm ground. If labor and profit conditions can hold steady next year, then asset prices have an opportunity to build on their gains from this year. 

Connect with your advisor in the new year 

As you look ahead to 2026, an Ameriprise financial advisor can help you understand how these insights apply to your investment strategy. They can also help you position your portfolio for the new year and identify actions you can take in 2026 to stay on track toward your financial goals.