December 2025 Market Commentary

Major U.S. equity indices finished the month relatively flat, capping off a third consecutive year of above-average returns for stocks. Global stocks were generally up for the month, with the China Shanghai Composite, Japan Nikkei 225, the FTSE 100, Germany DAX and France CAC 40 all racking up gains. 

The Federal Reserve lowered the federal funds rate by 25 basis points to a range of 3.5% to 3.75%. Interest rate traders are currently pricing two rate cuts in 2026 as the most likely scenario, but the path forward is far from certain as policymakers are increasingly divided and the next Fed Chair soon to be announced.  

Energy markets were notably volatile during the month. Crude oil prices dropped to the lowest level in nearly five years before largely recovering. The outlook for oil supply fluctuated as Russia-Ukraine peace talks seemingly stalled and President Trump ordered a blockade of Venezuela oil tankers. Early in the month, US natural gas futures continued the rally that began in mid-October and reached a nearly 3-year high on forecasts of a colder winter that would support gas-intensive hearing. Prices then retreated for most of the month but finished the year modestly higher despite US gas production reaching record levels. 

Metals also saw plenty of action. Gold, silver, and copper all set record highs during in December, but plunged near month-end. Silver was most notable with the biggest one-day decline since 2021. The decline was largely attributed to a combination of profit taking and a rise in margin requirements across a range of metals contracts by exchange operator CME. 

U.S. economic growth has been much stronger than presumed. The long-awaited initial estimate of third quarter U.S. gross domestic product finally arrived in December after being delayed by the government shutdown. Annualized growth of 4.3% for the quarter marked the biggest expansion in two years, driven by strong consumer spending and net exports. The resiliency of the economy is notable amidst the backdrop of rising unemployment, choppy payroll growth, and dour consumer sentiment. Productivity gains and a disproportionate share of spending by higher-income households may be underappreciated factors allowing for continued economic growth despite headwinds that tend to attract more attention. 

Written by SAM’s Invest Team on 1/1/20206.