US stocks are set for a third-straight year of stellar gains

By John Towfighi, CNN

New York (CNN) — The US stock market is about to achieve something so rare that it’s only happened five times since the 1940s: three consecutive years of double-digit gains.

The S&P 500 is set to rise 17% this year, after rising 23% in 2024 and 24% in 2023. That gain comes despite concerns about tariffs, geopolitical turmoil, nerves about a bubble and the longest government shutdown in history.

A three-peat of double-digit gains is relatively rare. The index has only experienced it five times before this year, with two occurrences ending in a four-peat and one — in the 1990s — ending in a five-peat, according to Sam Stovall, chief investment strategist at CFRA Research.

Stocks were boosted in 2025 by robust corporate earnings, enthusiasm about AI and optimism about interest rate cuts from the Federal Reserve.

“Equity markets are ending the year on a high note, with the S&P 500 on track for its third consecutive year of double-digit returns, driven by AI momentum and a resilient economy that has shrugged off fiscal and political headwinds,” Craig Johnson, chief market technician at Piper Sandler, said in a note.

A year of extreme volatility

The S&P 500 entered the year on the heels of its strongest back-to-back yearly performance since the 1990s. As President Donald Trump prepared to take office, Wall Street was cautiously optimistic about the prospect of further gains.

Stocks tumbled in late January after Chinese tech upstart DeepSeek unveiled an AI chatbot that raised concerns Silicon Valley was pouring unnecessary amounts of money into AI companies. But markets reclaimed higher ground as investors doubled down on bets that US companies were poised to win a race for superior AI technology — a theme that has propelled markets higher this year despite nerves about a bubble.

Markets experienced a bout of historic volatility in the spring as Trump rolled out his so-called “Liberation Day” tariffs, levying import duties on nations across the globe and threatening to upend the global trading system.

But stocks rebounded sharply after Trump walked back his most severe tariff threats, and the S&P 500 and Nasdaq in late June hit their first record highs since February. Stocks have largely coasted higher since, buoyed by strong corporate earnings and Fed rate cuts, which can make stocks relatively more appealing than bonds and support higher stock prices.

The Dow Jones Industrial Average has gained 13.7% this year. The blue-chip index entered the year trading around 43,000 points, tumbled below 37,000 points in April, and then rebounded as Trump delayed most of his tariffs. The Dow hit a fresh record high above 45,000 in August and then surpassed 46,000, 47,000 and 48,000 points in quick succession, sometimes hitting those milestones in just a few weeks.

AI has been the story of the year and, consequently, the tech-heavy Nasdaq Composite has risen 21%, making it the best performer of the three major indexes each of the past three years. Tech and artificial intelligence stocks have powered US markets higher since October 2022, when OpenAI first debuted ChatGPT, marking the start of an AI bull market.

It was a year of flashes of extraordinary volatility. Wall Street’s fear gauge, the CBOE Volatility Index, surged in April to levels not seen since the Covid-19 pandemic. The VIX flared up again in June as tensions flared between Israel and Iran, but volatility has since settled.

Bonds

The Treasury market — which influences borrowing costs across the economy — was largely stable after intense volatility in the spring related to Trump’s tariffs.

The 10-year Treasury yield started the year at 4.57% and ended the year at 4.12%, helping to keep mortgage rates lower in 2025.

Bond yields and prices move in opposite directions. Ten-year Treasury bonds rallied, pushing yields lower, as investors adjusted to prospects of Fed rate cuts and a weakening labor market.

Meanwhile, the 30-year Treasury yield started the year at 4.79% and ended the year at 4.8%. The 30-year Treasury yield ended the year slightly higher as concerns linger about stubborn inflation.

Dollar’s worst year since 2017

The US dollar weakened against other major currencies this year. Its decline was a defining feature of markets.

The dollar index, which measures the dollar’s strength against six major currencies, fell 9.5% this year, set for its worst year since 2017.

The dollar weakened amid affronts to the Fed’s independence, lower interest rates from the central bank and uncertainty about US policy decisions and tariffs.

Precious metals

Gold futures traded in New York have soared 66% this year, set to post their best annual gain since 1979. Gold futures entered the year trading at around $2,640 a troy ounce and hit a record high of more than $4,500 in December before paring some gains and trading at around $4,355.

Gold is considered a resilient investment, with investors expecting the yellow metal will retain its value in crisis, if inflation surges, or if currencies drop in value.

As gold climbed higher, other precious metals followed. Silver had a standout year, as the metal smashed through records and briefly soared above $80 a troy ounce. Silver prices have gained 164% in 2025.

Silver prices have been boosted by dual demand from investors and industry. Silver is widely used in solar panels, electric vehicles and batteries.

“Silver was the undisputed champion of 2025,” said Luke Rahbari, CEO at Equity Armor Investments.

Other precious metals have had stellar years, too: Platinum futures have soared 144%, while palladium futures have surged 87%.

Copper, oil and commodities

Copper futures traded in New York have gained 43% this year, set to post their best annual gain since 2009.

Copper prices soared because of increased industrial demand, in addition to uncertainty about tariffs and fractures in international trade.

Oil prices whipsawed amid geopolitical tensions but ended the year lower. US crude oil prices fell roughly 18% this year to $58 a barrel, hovering near their lowest level in roughly four and a half years. Brent crude, the international benchmark, fell 17% to $61.97 a barrel.

Meanwhile, other commodities had a mixed year. Cocoa futures tumbled 48% this year, reversing course after soaring 178% in 2024. Cocoa prices had spiked last year amid climate concerns, and fell this year as the outlook for harvests improved.

International stocks

While US stocks had a great year, international markets did even better.

South Korea’s benchmark Kospi index surged 76%, boosted by enthusiasm about AI. Japan’s Nikkei 225 gained 26%.

In Europe, markets received a boost from plans for government spending on defense and improved prospects for economic growth. European defense stocks have rallied this year, with German manufacturer Rheinmetall gaining 160%.

International stocks were also boosted by a weaker US dollar. When the dollar weakens in value and other currencies strengthen, it boosts the value of investment denominated in those currencies.

Bitcoin

Bitcoin started the year with a bang and ended with a whimper.

The world’s largest cryptocurrency by market value ended the year trading around $88,000, posting an annual loss of roughly 6.6%.

Bitcoin prices had soared this year — hitting a record high of $126,000 in early October — as the Trump administration promoted crypto-friendly policies and ushered in mainstream acceptance of cryptocurrencies. However, the crypto market struggled at the end of the year as recent sell-offs spooked some investors.

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