U.S. stocks will start 2026 in the same way as 2025.
Artificial intelligence stocks soared on Friday, but the rest of the market was mixed. The tech-heavy Nasdaq was flat in midafternoon trading, but the broader S&P 500 rose about 0.1% and the Dow Jones Industrial Average rose about 0.5%, or 250 points.
The AI boom that drove much of investors' stock gains in 2025 is likely to remain a dominant market theme over the next year, although skepticism remains. Analysts note that global economic growth and the possibility of lower interest rates could also boost U.S. stocks.
“Most financial assets performed reasonably well in 2025, including global stocks, bonds, credit, and financial assets. [emerging market] All assets had a strong year,” Jim Reid, global head of macro research and thematic strategy at Deutsche Bank, said on Friday.
“This is driven by continued global growth, continued optimism about the potential of AI, and further central bank interest rate cuts.”
Wall Street analysts generally agree. All analysts surveyed in the Bloomberg survey, from the world's largest banks to smaller companies, expect the S&P 500 index to rise, with the consensus being for a 9% annual rise. An increase of this magnitude is only slightly smaller than the index's average return over the past 20 years. As of Dec. 29, no one predicted the S&P 500 would fall on an annual basis.
The S&P 500 rose more than 16% in 2025, despite disruptions related to President Donald Trump's sweeping global trade policies at the beginning of the year. However, the explosive growth of the AI sector ensured the index secured a third consecutive year of positive returns.
Many AI companies opened the year with profits. SanDisk, Micron, Western Digital, Intel and Constellation Energy were among the top gainers. The move was fueled overnight by news of two AI IPOs in Asia and a paper published by China's DeepSeek explaining how AI could potentially be developed in a more efficient way.
On Friday, multitrillion-dollar tech companies Nvidia, Broadcom and Taiwan Semiconductor also soared.
Home furniture retailers RH (formerly Restoration Hardware) and Wayfair also surged in early trading after President Trump postponed additional tariffs scheduled for New Year's Day. These obligations would apply to upholstered furniture, kitchen cabinets and vanities.
Precious metals such as gold and silver, which recorded their best annual gains in 2025 since the 1970s, also started the day slightly higher. However, as the days passed, the gold price reversed and fell slightly. Silver also soared nearly 4% earlier, but gains had slowed to less than 1.5% by 2:30 p.m. E.T.
In a positive sign for consumers, WTI and Brent crude also fell slightly. Crude oil recorded its biggest annual decline since 2020 last year, which played a big role in the drop in gas prices. On Friday morning, AAA reported that the average price at the pump had fallen to $2.83 per gallon, down from $3.06 a year earlier.
With very low trading volumes, profits across precious metals, stocks and commodities also declined. The holidays and the weeks around New Year's are typically the times when trading is at its thinnest.
Despite their strong gains in 2025, U.S. stocks still underperform international stocks by the widest margin since 2009. The S&P's 16% rise in 2025 was offset by a more than 30% rise in the MSCI All Country World (ex-U.S.) index, which measures the performance of global stock markets excluding U.S. stocks. Some markets have soared even more.
South Korea's Kospi benchmark rose 76% thanks to the likes of electronics giant Samsung and AI chipmaker SK Hynix. Japan's Topix, Germany's DAX and the UK's FTSE 100 also rose more than 20%.
Topix's rise was also helped by a 540% jump in Kioxia, the world's best-performing stock last year, just one sign of the AI boom's insatiable appetite for computing power.
Still, Aditya Babu, senior U.S. economist at Bank of America, cautions that “there's a very interesting dichotomy between the weakness in labor force statistics and the strength in consumer sentiment.”
“We're kind of balancing on a knife edge, and we have to figure out which way it's going to lean,” he said.
Bank of America conservatively projects that the S&P 500 index will only rise about 3.7% from the end of 2025.
“It's not as exciting as we've enjoyed in recent years, but there's still a lot of really strong upside potential,” said Savita Subramanian, head of U.S. equity strategy at Bank of America.
