| |
Market Indices | |
At-A-Glance | |
| |
Fourth Quarter 2025 | |
The S&P 500 advanced nearly 18% in 2025, marking three back-to-back years of double-digit gains, following returns of 25.02% in 2024 and 26.29% in 2023. Such a feat is rare for Wall Street, occurring only five times before, this time being the sixth. Moreover, taken together, the S&P 500’s “three-peat” performance was its seventh-best run on record, roughly returning almost 80% from the start of 2023. Equity gains were supported by a resilient and growing economy, robust corporate earnings (up 13.5%Y/Y in Q3), enthusiasm about AI and optimism stemming from three interest rate cuts from the Federal Reserve. Stocks mildly trimmed gains at the end of December with the S&P 500, Dow Industrials and Nasdaq Composite each falling four straight trading days to close out 2025. This year’s winning performance was not without volatility, with markets experiencing a sharp early year selloff after President Trump introduced global trade tariffs that were initially more heavy-handed than expected. The S&P 500 suffered an 18% drawdown through April 8, while the Nasdaq Composite and small cap focused Russell 2000 slumped over 20% each. However, not even successive bouts of inflation fears, rising geopolitical concerns and shifting outlooks for Federal Reserve interest rate cuts have failed to derail the rally. Even so, precious metals brightly outshined stocks. It was the best year for gold and silver since 1979 and copper climbed 41%, capping its best year since 2009. In delayed economic data, Inflation readings came in softer than expected but were viewed skeptically amid distortions related to the government shutdown. Labor market reports were mixed, with the Unemployment rate edging higher and weekly jobless claims declining. International stocks continued to widely outperform the U.S. this year. After climbing 3% in December to cap a Q4 return of nearly 4.9%, the MSCI EAFE index of developed markets excluding the U.S. surged over 31% in 2025. Emerging markets broadly outperformed the U.S. in all three time periods, eclipsing the U.S. fourth quarter gains by 2.07% and not quite double the U.S. yearly gain, returning 33.57% in 2025. As shown in the style box performance boxes below, U.S. Value and Blend outperformed Growth in December and the quarter, while Large Cap Growth retained its overall leadership for the year. Notably, Large Cap Value outpaced Mid Cap Growth by over 7.5% during the quarter. Continuing year-to-date returns trends, Large cap Growth (+18.56%) retained its position as the single best equity style in 2025, although all other styles narrowed their annual differentials. | |
 | |
Top & Bottom Performers | |
Sector performance favored Financials and Healthcare respectively in December and the fourth quarter as investors trimmed positions in high-flying Big Tech stocks on valuation concerns. Technology slipped 0.25% in December, trimming its fourth quarter gain to 1.42%. All 11 sectors finished positive for the year, with Communication Services and Technology boosted by outsized artificial intelligence (AI) tailwinds. Since their April 8 lows, Communication Services and Technology have surged respectively by 56.15% and 63.36%. | |
 | |
In fixed-income performance, U.S. Treasurys (as measured by the Bloomberg U.S. Government Bond Index) gained 0.91% in the fourth quarter, boosting 2025 gains to 6.31%. Longer-term U.S. Government bonds returned slipped 0.04% in the final quarter, mildly trimming its 2025 return to 5.61%. Both Treasury indices posted their strongest year of returns since 2020. In other fixed-income assets, investment-grade bonds of all types (as measured by the Bloomberg U.S. Aggregate Bond Index) climbed 1.10% in the fourth quarter, extending its full-year return to 7.30%. Non-investment-grade High-Yield corporate bonds advanced 1.31%, lifting its 2025 solid performance to 8.62% U.S. municipal bonds performed best on a quarterly basis, gaining 1.56%, capping the year with a 4.25% return. | |
 | |
This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on X. |
About Cetera® Investment Management
Cetera Investment Management LLC (CIM) is a Securities and Exchange Commission registered investment adviser owned by Cetera Financial Group® (CFG). CIM provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers and registered investment advisers.
About Cetera Financial Group
“Cetera Financial Group” (CFG) refers to the network of independent retail firms encompassing, among others, those that are members FINRA/SIPC; Cetera Advisors LLC, Cetera Wealth Services, LLC (f/k/a Cetera Advisor Networks), Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), and Cetera Financial Specialists LLC. Those that are Securities and Exchange Commission registered investment advisers; Cetera Investment Management LLC and Cetera Investment Advisers LLC, .CFG is located at 655 W. Broadway, 11th Floor, San Diego, CA 92101.
Avantax Planning Partners, Inc. is an SEC registered investment adviser within the Aretec Group, Inc. (dba Cetera Holdings). All of the referenced entities are under common ownership
Disclosures
Financial professionals affiliated with Cetera firms are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.
The material contained in this document was authored by and is the property of CIM. CIM provides investment management and advisory services to a number of programs sponsored by affiliated and non-affiliated registered investment advisers. Your registered representative and/or investment adviser representative is not registered with CIM and did not take part in the creation of this material. They may not be able to offer CIM portfolio management services.
Nothing in this presentation should be construed as offering or disseminating specific advice to any individual without the benefit of direct and specific consultation with a financial professional. Information contained herein shall not constitute an offer or a solicitation of any services. Past performance is not a guarantee of future results.
For more information about CIM, please reference the CIM Form ADV 2A and the applicable ADV 2A for the registered investment adviser your financial professional is registered with. Please consult with your financial professional for their specific firm registrations and available program offerings.
No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.
All economic and performance information is historical and not indicative of future results. The market indices discussed are not actively managed. Investors cannot directly invest in unmanaged indices. Please consult your financial professional for more information.
Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards. A diversified portfolio does not assure a profit or protect against loss.
Glossary
The Bloomberg Barclays Capital U.S. Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included.
The Bloomberg Barclays US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity, but in practice the index holding have a fluctuating average life of around 12.8 years.
The Bloomberg Barclays US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.
The Barclays U.S. Government Bond Index is comprised of the U.S. Treasury and U.S. Agency Indices. The index includes U.S. dollar-denominated, fixed-rate, nominal US Treasuries and US agency debentures (securities issued by US government owned or government sponsored entities, and debt explicitly guaranteed by the US government).
The Bloomberg Commodity Index is a broadly diversified index that allows investors to track commodity futures through a single, simple measure. It is composed of futures contracts on physical commodities and is designed to minimize concentration in any one commodity or sector. It currently includes 19 commodity futures in five groups. No one commodity can comprise less than 2% or more than 15% of the index, and no group can represent more than 33% of the index (as of the annual reweightings of the components).
The Cboe Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices.
The MSCI EAFE is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.
The MSCI Emerging Markets is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.
The MSCI All-Country World Index (ACWI) is a market cap weighted index designed to represent performance of the full opportunity set of large- and mid-cap stocks across 23 developed and 26 emerging markets, covering more than 2,700 companies across 11 sectors and approximately 85% of the free float-adjusted market capitalization in each market.
The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap represents approximately 31% of the total market capitalization of the Russell 1000 companies.
The S&P BSE SENSEX Index is a free-float market-weighted index of 30 well-established and financially sound stocks on the Bombay Stock Exchange, representative of various industrial sectors of the Indian economy.
The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.
The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad-based capitalization-weighted index.
The Shanghai Composite Index is a stock market index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.
The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000. It has since reached a February 1985 high of 164.720, and has been as low as 70.698 in March 2008.
West Texas Intermediate (WTI) is a crude oil stream produced in Texas and southern Oklahoma which serves as a reference or "marker" for pricing a number of other crude streams. WTI is the underlying commodity of the New York Mercantile Exchange's oil futures contracts.