NEW YORK, December 31, 2025, 13:55 ET
- Wall Street’s main indexes edged lower in thin year-end trading, while still on track for double-digit gains in 2025.
- Big tech names weighed on the market as investors took profits with liquidity low ahead of the New Year holiday.
- Investors are turning attention to the Federal Reserve’s 2026 path after minutes showed sharp divisions over further rate cuts.
Wall Street’s main indexes inched lower in the final trading session of 2025, pressured by technology shares, but remained on track to finish the year with solid gains.
The late-year dip matters because it comes after a volatile year shaped by tariff uncertainty from President Donald Trump and a powerful run in artificial intelligence, or AI, stocks that pushed major indexes to record highs.
It also puts a spotlight on the market’s failure to deliver a “Santa Claus rally” — the seasonal pattern when the S&P 500 often rises over the last five trading days of December and the first two sessions of January — as investors instead booked profits into year-end.
At 12:00 p.m. ET, the Dow Jones Industrial Average was down 116.75 points, or 0.24%, the S&P 500 slipped 0.23% and the Nasdaq Composite fell 0.20%.
Technology stocks led the declines. Microsoft and Apple, two of the market’s biggest weights, were down 0.4% and 0.2%, respectively.
“I do not expect that the last few days will have so much bearing on the performance of the next year,” said Giuseppe Sette, co-founder and president of Reflexivity, pointing to profit-taking when trading volumes are thin.
The S&P 500 and the Dow were set to close their eighth straight month higher, their longest winning streak since 2017, after the year’s rally broadened beyond a narrow group of mega-cap tech leaders.
AI-linked stocks remained a key driver of 2025’s gains. Chipmaker Nvidia, up about 40% for the year, has been among the standout beneficiaries of the AI trade and earlier became the first publicly traded company to reach a $5 trillion market value.
Communication services was the top-performing sector in the S&P 500 this year, helped by Alphabet’s more than 65% rise, Reuters reported.
Some chip and storage names were also poised to post outsized annual gains. Micron Technology, Western Digital and Seagate were set to outperform many S&P 500 peers after more than tripling in value in 2025.
Not every corner of the market shared in the rally. FMC Corp and Fiserv were among the year’s laggards, down 71% and 67%, respectively, for 2025.
The market’s year-end posture also comes as investors weigh the outlook for U.S. interest rates. Fed officials were deeply split at the December meeting, and some backers of the rate cut saw the decision as finely balanced, minutes released Tuesday showed.
The Fed’s quarter-point cut lowered the benchmark overnight rate to a 3.5% to 3.75% range, and new projections issued after that meeting pointed to just one rate cut expected in 2026, according to the minutes.
Among individual stocks on Wednesday, Nike gained about 4% after CEO Elliott Hill bought roughly $1 million of company shares, while Vanda Pharmaceuticals jumped 27% after the U.S. Food and Drug Administration approved its drug for the prevention of motion-induced vomiting.
