Most people have already put Thanksgiving to bed as we race toward the close of the year; But before we do, I thought it was important to take a step back and reflect on all the positives we experienced in 2025. A glass half-full if you will.
It was far from a smooth ride - tariff tantrums, AI hype cycles, elevated valuations, and geopolitical jitters kept traders on their toes. But as we carve the proverbial turkey one last time, here are 10 reasons investors can raise a glass and say, “thank you, markets!”
1) The Bull Market’s Third Anniversary
Despite April’s “Liberation Day” tariff shock, the S&P 500 staged a stunning comeback, surging nearly 38% from its lows and notching fresh all-time highs. With a few weeks to go in 2025, the S&P 500 has a chance to notch its third consecutive year of 20%+ gains, a feat last seen in the late 1990s. Corporate profit growth played a major part, as S&P 500 earnings eclipsed double digit growth rates for all four quarters. Historically speaking, the bull market has more room to run, averaging north of 5 years in length for most reference periods.
2) Artificial Intelligence Transformed
From chipmakers to cloud giants, to robotics, artificial intelligence drove earnings and productivity gains. NVIDIA even crossed the $5 trillion market cap milestone, cementing tech’s role as the market’s main course. We expect the theme to evolve in 2026 and beyond, as the technology reaches critical mass and transforms the way businesses and consumers interact.
3) Corporate America Paid the First Tariff Tab
After Wall Street balked at the import duty rates in April, the Trump Administration walked back the most severe tariff scenarios and ultimately found middle ground with a majority of America’s trading partners. While there are still a few heavyweight economies left to sort out (namely China, Canada, and Mexico), it is safe to say that the fear of economic headwinds was overblown… at least through the first nine months of policy. Tariffs likely added a marginal amount of pressure to the annual inflation rate, but investors should be thrilled that corporations at home and abroad, have footed the 2025 tariff bill.
4) International Markets Stormed Back
In a year of tariff drama and trade resets, global international equities reminded us why diversification matters. Investors leaned into a spike in fiscal stimulus across developed markets, Europe in particular, offering hope that a boost in economic growth will follow. Developed market returns outpaced domestic markets, with the former finishing up approximately 29%. Select pro-business policies in China, as well as a surge in industrial metal prices fueled emerging markets, which are up 32% in 2025.
5) Gold Bugs Flex
Traditionally, an equity market volatility hedge, gold became a headline act with a 50%+ rally and crossing the $4,000 per ounce mark. Growing global sovereign debt levels, elevated inflation, trade uncertainty, and a weaker dollar pushed the precious metal to new highs.
6) The One Big Beautiful Bill Act was Investor Friendly
Folks on both sides of the aisle will point to the nearly 900-page bill’s praise or shortcomings. From a Wall Street perspective, there is a lot to like in the short-term. Avoiding the sunset of tax cut provisions from Trump’s first term is the most immediate benefit. Most Americans should benefit from a bump in the standard deduction, with additional windfalls for those over the age of 65. For businesses, we especially like tax-friendly treatments of corporate accounting items including capital expenditures, research and development expenses, and plant, property, & equipment (PP&E). Adjustments to depreciation and amortization allowances are also noteworthy.
7) The Fed Was Accommodative
The Fed delivered three cuts in the fall, and more is expected by economists in 2026. Lower borrowing costs buoyed equities and bonds alike. Following the central bank’s December meeting, the benchmark Fed Funds rate sits at 3.50% - 3.75% and the 10-year Treasury yield is hovering around 4.15%. The average 30-year fixed mortgage rate is approximately 6.10%.
8) Bonds Delivered for Conservative Investors
The bond market applauded the Fed’s decision to cut rates, seemingly keeping the “bond vigilantes” at bay for now. Falling yields and higher bond prices rewarded conservative investors across most fixed income segments. The Bloomberg US Aggregate Bond Index is up about 7% on the year. Perhaps equally as important, the asset class served as a backstop to equity market volatility in the spring months.
9) Small Caps Joined the Party
Small cap stocks kicked into high gear coming out of spring volatility. Smaller companies benefitted from better news on the tariff front, the Fed’s interest rate cuts, favorable growth provisions in the One Big Beautiful Bill Act, and lower energy prices. The Russell 2000 Index outperformed large cap stocks by 350 basis points in 3Q, and is on pace to outperform again in 4Q, a welcome sign for investors. Should the AI story evolve, we would expect small caps to benefit from the tech-driven mega theme.
10) The US Consumer Proved Resilient
Despite a slowing labor market, and stubbornly elevated inflation, the US consumer was resilient in 2025. Although some lower-income consumers are showing signs of distress, the wealthiest demographics are more than making up for it, as stock and bond market appreciation, rising home values, and locked in / low fixed borrowing rates continue to influence consumption patterns. For those in the face of price pressures, some relief may be on the way as shelter costs have begun to decelerate, borrowing rates are directionally improving, and tax returns should get a boost in the spring.
Closing Thoughts
2025 taught us that volatility can sometimes be the price of admission for long-term wealth creation. From AI breakthroughs to rate relief, investors who stayed disciplined were rewarded handsomely. So, here’s to resilience, diversification, and the enduring power of optimism—because gratitude belongs in every portfolio.
Keep an eye out for a year-end round table chat from Orion’s investment strategy team in the coming days, as we offer our thoughts on what topics were top of mind for advisors in 2025, a few fun facts to keep in your back pocket at your holiday parties, and a look ahead to 2026.