| By Harry Boxer, Technical Market Analyst
Equity Markets, Volatility, and Global Performance
2025 was a financially rewarding year for traders, with global equity markets delivering strong returns. The S&P 500 recorded 39 new all-time highs, while stock markets in Germany, the U.K., and Japan also surged to record levels. Bonds, though trailing equities, posted positive returns, with U.S. investment-grade bonds achieving their strongest annual gain since 2020. Credit-sensitive fixed-income investments fared even better, with emerging-market debt and U.S. high-yield bonds gaining over 8%.
After two years of relative calm in markets, volatility returned in 2025 as investors faced trade-policy upheaval and a record-breaking government shutdown. The S&P 500 logged 13 daily moves of more than 2% (six higher, seven lower), exceeding the combined total of the prior two years. Twelve of these occurred in the first half of the year following the Trump administration’s April tariff announcements. Stocks fell sharply on recession fears, with the S&P 500 dropping 19% from its peak.
However, subsequent negotiations lowered tariffs to levels still elevated by historical standards but meaningfully below the April peak. De-escalating trade tensions, steady economic activity, and ongoing AI enthusiasm helped pave the way for strong earnings growth and market gains, with the S&P 500 posting its third consecutive year of returns over 15%.
Sector Leadership and Index Performance
The three distinct groups that led the market this year were Communications Services +34.1%, Information Technology +25.7%, and Industrials +21.3%. Year to date the major indices surged nearly 18% for the S&P 500 and 22.2% for Nasdaq, and the Russell 2000 small cap index is at +13.64% for the year.
The benefits of global diversification were evident in 2025, with international stocks outperforming U.S. equities by 13%, the largest margin since 2009. Fiscal stimulus in Germany and monetary easing by the European Central Bank supported eurozone economic activity and markets. In Japan, equities posted strong gains despite higher U.S. tariff rates, with corporate profit margins surging to an all-time high.
On the week, the S&P 500 surpassed a record high on Tuesday and the Dow followed suit on Wednesday, pushing above their previous peaks set less than two weeks earlier. In a holiday-shortened trading week the S&P 500 led advances with a 1.4% gain, followed by Nasdaq +1.2%. The small-cap Russell 2000 Index was the worst performer of the major indexes, finishing the week 0.19% higher.
Precious Metals, Crypto, and Oil
Precious metals prices pushed their record levels higher, with silver surpassing $77 per ounce for the first time and gold and platinum also setting record highs. Silver is up around 155% year to date based on Friday afternoon’s price and gold was up about 70%.
A rough end to a big year for bitcoin: Bitcoin investors had a lot to be thankful for this year. Growing legitimacy among institutional investors, a pro-crypto U.S. administration and major legislation, and all-time highs. But the last quarter hasn’t gone so well. A major crypto liquidation event in October rattled investors, and bitcoin futures prices are down around 24% since then, putting it about 7% lower on the year.
Meanwhile, gold and silver have soared since that crypto liquidation in October, with their futures prices rising about 13% and 51%, respectively. The metals’ moves call into question a core element of bitcoin’s investment thesis: that it’s a store of value, the new “digital gold.” With bitcoin’s price currently limping along in a narrow range, investors may find out relatively soon whether the early days and weeks of 2026 will bring more pain or a revival of bullish sentiment.
The price of oil rebounded modestly in the latest week, although it remained on pace for the steepest full-year decline since 2020. U.S. crude was trading around $57 per barrel on Friday afternoon, well below its year-end 2024 level of about $72.
Volatility and Technical Outlook Heading Into 2026
An index that tracks investors’ expectations of short-term U.S. stock market volatility fell on Wednesday to the lowest level in more than 12 months. The Cboe Volatility Index closed at 13.6, down from a recent high of 26.4 on November 20. The year-to-date high came in early April, when the VIX surged above 50 amid uncertainty over tariffs.
Technically the markets are quite extended and vulnerable to retracements/pullbacks. Be very alert in the first part of 2026 to the possibility of a substantial decline. Pay close attention to short and intermediate-term support levels. They can be found near SPX 6850 and 6790, but 6720-22 represents a level that if broken might send the indices substantially lower. Resistance lies near 6945-50, 6990, 7000 and 7040-50.
Final Thought
In any case, as we always do at thetechtrader.com, we’ll “Trade What We See, Not What We Think.”
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