"Investors had to battle above-target inflation for the whole year, the launch of a new tariff and trade policy by the Trump administration which avidly sought to reel-in spending on international manufacturing and provide the on-shoring trends the Trump administration has sought for a long time, and a series of valuation-related scuffles within the market at the largest market cap tiers."
"The tech sector will continue to be the focal point in 2026, with AI spending accounting for the vast majority of GDP growth in 2025. That said, given this heightened CapEx spending, U.S. GDP did grow faster than expected. And despite an uptick to a 4.6% unemployment rate (still low, by historical standards), spending from higher-income consumers has made up for some deterioration among the lower and middle-class consumer groups."
2025 delivered overall market resilience despite persistent above-target inflation, new tariff and trade policies, and valuation strains among large-cap stocks. The Trump administration's tariff and on-shoring measures aimed to reduce international manufacturing dependence and shift spending domestically. Technology dominated growth as AI-related spending drove most GDP gains, and elevated CapEx supported faster-than-expected U.S. GDP expansion. Unemployment rose to 4.6% but remained historically low, with higher-income consumer spending offsetting weakness among lower- and middle-class groups. Markets showed relative stability as investors navigated headwinds and pushed equity prices higher across the year.
Read at 24/7 Wall St.
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