A trader works at the New York Stock Exchange on Dec. 29, 2025.
NYSE
S&P 500, YTD performance
Those declines are somewhat worrisome given that the final five trading days of the year, and the first two of the next, are a seasonally rewarding stretch — often referred to as a time for the “Santa Claus” rally — that usually gives stocks one last push toward year-end.
But the recent profit-taking could also foreshadow some of the volatility ahead. Strategists surveyed by CNBC expect the S&P 500 could post yet another double-digit advance in 2026, but many worry stocks could spend much of the year range-bound as corporate earnings growth catches up to lofty multiples.
“As we look towards next year, we’re expecting a little bit more volatility,” Meghan Shue, head of investment strategy and portfolio construction at Wilmington Trust, said Tuesday on CNBC’s “Closing Bell.”
“I think this is a healthy sort of churn as we reset for the next leg of the bull market, which we expect to continue, outside of what we still have as a decently high recession risk,” Shue added.
Artificial intelligence has been the defining force driving the market for the last three years. In 2023, the S&P 500 surged 24%, after the debut of ChatGPT the prior year unleashed a fervor around the companies most likely to benefit from a technological revolution that harkens back to the dawn of the internet.
In 2024, the broad market index rallied 23%. As of Tuesday’s close, in 2025, the S&P 500 is up more than 17%, and on the cusp of all-time highs.
Still, the AI narrative fractured somewhat this year, as the rally started to broaden out to other sectors, and even performance among the so-called Magnificent Seven stocks bifurcated. Alphabet was the big winner among the megacaps, up more than 65% year to date, as investors bet the search giant could edge out OpenAI. Amazon was the laggard, gaining roughly 6%.
What’s more, many asset classes outside the megacaps started to outperform. Commodities had an especially good year, with gold up more than 66%, and silver higher by more than 165%.
As of Tuesday’s close, stocks were also on pace to close out a winning month. The Dow is up 1.4% month to date, its eighth winning month in a row, the first such streak going back to 2018. The S&P 500 is up 0.7%, also an eight month win streak. The Nasdaq is higher by 0.2%, its eighth positive month in nine.
— CNBC’s Alex Harring and Chris Hayes contributed to this report.