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December 30, 2025
Good Afternoon,
Despite faltering earlier in the year, 2025 turned out to be solid for investment markets. After a sharp downturn in the wake of President Trump’s springtime tariff rollout, all three major stock indexes have rallied back to notch multiple records. Interest rates have fallen since January, although not in a straight line, providing positive returns for bond holders. While GDP growth has jumped and inflation has cooled, the US economy is growing increasingly fragmented. Higher-income households have been drivers of spending and wealth growth, while lower-income households have struggled.
Heading into 2026, investors are facing lofty stock valuations among many other headwinds. Another government shutdown could happen by the end of January. There is significant geopolitical turmoil throughout the globe. The mid-term elections in the fall could see a reversal in Congress and a stage set for greater conflict between Democrats and the President. Interestingly, the second year of the four-year presidential cycle has factually been the worst for the stock market. Since 1928, the S&P 500 has posted a median gain of just 0.6% in the second year of the cycle, versus median gains of 8%+ in years one, three and four. The S&P 500 fell 19.4% in the second year of Biden’s term (2022) and 6.2% in the second year of Trump’s first term (2018). But there are always headwinds, and we remain cautiously optimistic for 2026.
We would like to take a moment and thank you for your trust, confidence, and patience over the years. It means a great deal to us, and we greatly appreciate it. We wish you a very happy, healthy, and prosperous New Year!
See you next year!
Weller Financial Group
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