U.S. Economy Ends 2025 on Strong Note with Robust Consumer Spending and Tech Sector Surge in Final Trading Days

U.S. Markets Close Year with Gains Amid Holiday Data Boost

The U.S. stock market wrapped up 2025 with notable gains on Monday, December 29, as the S&P 500 and Nasdaq Composite posted fresh records. Consumer spending surged 0.5% in November, exceeding forecasts and signaling resilience despite elevated interest rates.

Tech giants like Nvidia and Apple led the rally, with shares climbing over 2% in the session. Federal Reserve data highlighted a 2.8% annualized GDP growth rate for Q4 estimates, bolstering investor confidence heading into the new year.

Fed Signals Steady Policy Stance

Federal Reserve Chair Jerome Powell addressed year-end economic indicators in a virtual briefing on December 29. He noted that inflation cooled to 2.4% year-over-year, nearing the central bank's 2% target, but cautioned against premature rate cuts.

• Unemployment steady at 4.1%, with 151,000 jobs added in December preliminary figures.
• Manufacturing PMI rose to 49.3, indicating stabilization.
• Housing starts increased 3.1% amid moderating mortgage rates around 6.5%.

Powell's comments quelled speculation of a January rate adjustment, with markets now pricing in a 75% chance of a 25-basis-point cut in March 2026.

Energy Sector Volatility Amid Geopolitical Tensions

Oil prices dipped 1.2% to $72 per barrel on December 29 after U.S. airstrikes in Venezuela disrupted supply chains. The Trump administration confirmed the strikes targeted drug cartel operations at key ports, aiming to curb fentanyl inflows.

Domestic production hit record highs at 13.4 million barrels per day, offsetting global concerns. Analysts from Goldman Sachs predict crude will average $75 in Q1 2026.

Retail Sales Beat Expectations During Holiday Rush

November retail sales jumped 0.4% month-over-month, driven by strong e-commerce and discount store performance. Companies like Walmart and Amazon reported record Black Friday-Cyber Monday sales exceeding $12 billion.

The data underscores consumer strength, with holiday spending projected to reach $1.05 trillion for the season. However, auto sales softened due to high financing costs.

Corporate Earnings Highlight Tech Dominance

Final 2025 earnings from Big Tech firms showcased profitability. Microsoft announced $65 billion in quarterly revenue, up 18% year-over-year, fueled by AI cloud services.

• Amazon's AWS segment grew 19%, beating estimates.
• Tesla delivered 520,000 vehicles in Q4, surpassing guidance.
• Boeing shares rose 4% after securing a $10 billion defense contract.

These results propelled the Nasdaq to a 28% annual gain, its best since 2023.

Looking Ahead to 2026 Challenges

Economists at JPMorgan forecast 2.1% GDP growth for 2026, tempered by potential tariff hikes under the incoming administration. Trade tensions with China loom as a key risk, with proposed 60% tariffs on imports.

Labor market tightness persists, with wage growth at 4.0%. The Bureau of Labor Statistics will release full December jobs data on January 10.