Investors have much to be thankful for in 2025

Review the latest Weekly Headings by CIO Larry Adam.

Key takeaways

• The S&P 500 index sails past the third year of the bull market
• Tech grabs the spotlight, but seven S&P 500 sectors have hit all-time highs
• 10 out of 11 S&P 500 sectors are currently posting year-to-date gains

With Thanksgiving around the corner, there’s so much to be thankful for in 2025, especially for investors. After a challenging start to the year, the economy and markets regained their footing quickly, with nearly all asset classes on track for solid gains heading into year-end. Looking ahead, there are reasons for optimism to continue into 2026 as well. In the spirit of Thanksgiving, we’ve compiled ten economic and market-related things we’re most thankful for in 2025 – because gratitude isn’t just for the dinner table; it belongs in our portfolios, too.

1. One stock market recovery since liberation day: After a volatile start to the year, equity markets have staged an impressive comeback. Since the April lows, when trade war turbulence and recession fears peaked, the S&P 500 surged 38%, marking one of the strongest six-month runs in history – before the recent pullback. If the S&P 500 regains its momentum as we head into year-end, we could see a rare three-peat – three consecutive years of 20+% returns, a feat last achieved during the 1995-1999 bull market.
2. About two percent GDP growth: Liberation Day (April 2) may have sparked recession fears, but economic growth proved resilient, likely ending the year just shy of 2%. Tariffs, initially seen as a major threat to corporate America, turned out to be less damaging than expected. Meanwhile, a game-changing leap in technology – artificial intelligence (AI) – helped give the economy a lift.
3. Three years of the current bull market: The S&P 500 just celebrated the third anniversary of the bull market – up an impressive 83% since it began. While sharp market swings and growth worries could have thrown things off track, earnings bounced back quickly after a brief dip as the economy sidestepped a recession. The good news: earnings continue to climb. With solid fundamentals and expectations for stronger economic activity next year, the outlook remains positive for the bull market to carry into year four.
4. First record for small caps in four years: Small caps had not joined other major US equity indices in posting multiple new records since the bull market began. However, that changed in late September when they finally broke through with the Russell 2000 hitting its first record high in four years. The catalyst: hopes for Fed rate cuts and perceived bargain valuations proved too tempting to ignore.
5. More than fifty percent participating in 401(k) plans: Tax-advantaged savings plans are one of the most effective tools for building long-term wealth. Rising participation signals a stronger focus on retirement readiness, where small changes today can lead to significant benefits over time. This trend underscores investors’ commitment to achieving their future financial goals.
6. Oil prices below sixty dollars per barrel: A near-record supply increase and sluggish demand, particularly in China, have been major factors driving oil prices lower year-to-date. Oil prices (WTI) now trade below $60 per barrel, down from an $80 peak earlier in the year. This is important as falling gas prices are now giving consumers some welcome relief on their everyday expenses. With the national average of gas prices on the cusp of breaking below $3/gallon, history suggests this could give consumer confidence a boost.
7. Seven S&P sectors hitting all-time highs: While headlines often spotlight tech stocks hitting new highs and the narrowness of the market, strength has been broad-based across the S&P 500 this year. Case in point: seven of the S&P 500’s eleven sectors – including industrials, financials, and consumer staples, to name a few – reached an all-time high during 2025. Meanwhile, we are keeping an eye on the healthcare sector, as its 8.75% QTD gain has propelled it within striking distance (~3.7%) of becoming number eight.
8. No longer eight percent mortgages: The sharp rise in mortgage rates from their COVID-era lows has been a headwind for the housing sector. Encouragingly, 30-year fixed rate mortgage rates have fallen nearly 2% from their 2023 peak and now hover around 6.3%. This decline should help stabilize the sluggish housing market and improve affordability for prospective buyers.
9. Nine trillion of additional household wealth: Strong gains in equities, bonds and (to a lesser extent) home prices have significantly boosted household wealth this year. Our estimates suggest these gains have added roughly $9 trillion to aggregate wealth, building on previous record levels. This surge has supported consumer spending in 2025 and is likely to provide an additional tailwind into 2026.
10. Ten S&P 500 sectors currently posting YTD gains: The performance of mega-cap tech stocks continues to capture headlines, but the gains have extended well beyond just tech. In fact, ten out of eleven S&P 500 sectors are currently posting year-to-date gains, with consumer discretionary on the cusp of turning positive. Notably, if all eleven sectors finish the year in the green, it would mark the first time since 2021 – a year defined by the post-COVID economic reopening.

Bottom line

While headlines often speculate about an AI bubble, we believe the long-term outlook for technology remains strong. Periodic volatility is a normal part of any innovation cycle and unlikely to derail our constructive view on equities. We remain positive on the technology sector – along with Industrials, which play a critical role in supporting data center expansion – given durability and transformative potential of the AI megatrend.

* MAGMAN represents a composite of Microsoft, Apple, Google, Meta, Amazon, Nvidia. The foregoing is not a recommendation to buy or sell MAGMAN stocks.

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All expressions of opinion reflect the judgment of the author(s) and the Investment Strategy Committee and are subject to change. This information should not be construed as a recommendation. The foregoing content is subject to change at any time without notice. Content provided herein is for informational purposes only. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices and peer groups are not available for direct investment. Any investor who attempts to mimic the performance of an index or peer group would incur fees and expenses that would reduce returns. No investment strategy can guarantee success. Economic and market conditions are subject to change. Investing involves risks including the possible loss of capital.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Diversification and asset allocation do not ensure a profit or protect against a loss.

Investing in small cap stocks generally involves greater risks, and therefore, may not be appropriate for every investor. The prices of small company stocks may be subject to more volatility than those of large company stocks.

S&P 500 Total Return Index: The index is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 7.8 trillion benchmarked to the index, with index assets comprising approximately USD 2.2 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

Russell 2000 Total Return Index: This index covers 2000 of the smallest companies in the Russell 3000 Index, which ranks the 3000 largest US companies by market capitalization. The Russell 2000 represents approximately 10% of the Russell 3000 total market capitalization. This index includes the effects of reinvested dividends.

Sector investments are companies focused on a specific economic sector and are presented here for illustrative purposes only. Sectors, including tech, are subject to varying levels of competition, economic sensitivity, and political and regulatory risks. Investing in any individual sector involves limited diversification.