Quarterly Market Review & 2026 Outlook
The S&P 500 closed 2025 with an impressive 17% gain, underscoring the market’s resilience and strength. That strong finish came despite a challenging start to the year. In this update, we revisit what last year’s swings taught us and look ahead to how broader market participation is shaping the landscape for 2026.
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This discussion is with Vector advisor and COO Jason Ranallo.
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Overview
"Today is the oldest you've ever been and the youngest you'll ever be." — Eleanor Roosevelt
Market Perspective & Key Takeaways
Broader market participation emerged in 2025: All 11 S&P sectors posted gains and international markets—especially emerging markets, the U.K., and Japan—led performance after years of U.S. dominance.
Volatility rewarded discipline: Despite a 19% first‑quarter 2025 drop for the U.S. stock market, markets rebounded sharply, ending 2025 up 17%.
Diversification remains essential for 2026: With stretched valuations in certain market segments, and policy uncertainty ahead, opportunities across global stocks, U.S. small companies, and fixed income reinforce the importance of a balanced, long‑term approach.
The S&P 500 stock index finished 2025 up 17%, marking the third consecutive year of double-digit gains. While impressive, the path to get there challenged investor resolve broadly. The market plunged 19% in the first quarter following sweeping tariff implementation, only to recover spectacularly by year-end.
Two significant shifts emerged in 2025. First, market breadth improved as only two (Alphabet, Nvidia) of the Magnificent 7 stocks outperformed the broader index. Second, international markets returned to prominence after years of U.S. dominance. Emerging markets gained 33%, while the United Kingdom and Japan returned 33% and 25% respectively, benefiting from lower valuations and dollar weakness.
Bonds staged a comeback with the Bloomberg Aggregate Bond Index returning over 7%—its best year since 2020—as the Federal Reserve (Fed) cut rates three times in the second half. Precious metals were standout performers, with gold rallying 65% and silver surging 160%, driven by central bank demand and silver's role in AI infrastructure.
Looking ahead to 2026, markets face both opportunities and challenges. Broader sector participation and healthier bond market conditions are encouraging, but valuations have stretched to dot-com-era levels within certain market segments. Policy uncertainty remains, with a new Fed Chair arriving in May and tariff policy continuing to evolve.
Eleanor Roosevelt’s words remind us that with each passing year, we carry more experience and insight than ever before, and we remain positioned for the opportunities still ahead. We continue to be guided by the same principles that have led us through past cycles: disciplined diversification, attention to fundamentals, and an alignment between your financial plan and your investment strategy. These enduring practices continue to anchor our decision‑making and support your long‑term goals.
If you’d like to review how you are positioned for the next few years and beyond, reach out.
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Chapters
0:00 ... Introduction
0:36 ... 2025 Market Performance
1:52 ... Market Concentration & Broadening
2:30 ... International Markets
3:16 ... Bonds & Interest Rates
4:14 ... Precious Metals
5:58 ... Regulatory
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