As 2025 approaches its final days, investors expect U.S. stock markets to end the year strongly. The S&P 500 is trading near the 7,000 level, a milestone it has never reached before. Broader equity indexes also remain near record highs after months of steady gains.

Strong year-end momentum

Major U.S. indexes remain on track to finish December in positive territory. Markets recovered from earlier volatility seen at the start of the month. At that time, concerns about high technology valuations weighed on sentiment.

However, buying interest returned quickly. Stocks regained ground as investors focused on earnings strength and expectations for monetary easing. The rebound supported confidence going into the final trading sessions of the year.

S&P 500 and Nasdaq performance

The S&P 500 has recorded multiple record closes in recent weeks. Its eight-month winning streak is shaping up to be the longest since 2017–2018.

The Nasdaq Composite has also posted solid gains. Technology stocks played a major role in driving performance during most of 2025. Still, leadership has recently broadened beyond tech.

Sector rotation broadens rally

Investors have shifted attention toward financials, healthcare, transportation stocks, and small-cap shares. This rotation has helped support the overall market rally.

Although technology stocks remain influential, other sectors have contributed more recently. As a result, market strength now appears more balanced than earlier in the year.

Federal Reserve remains in focus

Monetary policy continues to influence market expectations. The Federal Reserve has cut interest rates by 75 basis points across its last three meetings. The benchmark rate now sits between 3.50% and 3.75%.

Investors are watching for signals about future policy moves. The release of the Fed’s December meeting minutes could offer further clarity on rate direction in 2026.

Market sentiment and expectations

“Momentum is certainly on the side of the bulls,”
said Paul Nolte, senior wealth adviser and market strategist.

He added that barring major external disruption, bullish trends might persist as equities approached year-end.

Investors were also focused on the next Fed chair nomination after current chairman Jerome Powell completes his term in May. Any hint about leadership direction could sway sentiment early next year.

Full-year gains remain strong

For 2025, the S&P 500 is up nearly 18%, while the Nasdaq has gained about 22%. These increases reflect broad confidence in economic resilience and corporate earnings.

Despite occasional pullbacks, investors stayed committed to equities throughout the year. This consistency helped sustain upward momentum.

What investors are watching next

As year-end approaches, trading volumes may remain light due to holidays. Thin markets can sometimes lead to sharper price swings.

Still, many investors expect a stable finish. Attention will soon turn to early-January data and how markets position for 2026.