Ever wonder what it feels like when the market takes a breather right at the end of a blockbuster year? That’s pretty much what happened on December 29, 2025. After all the highs and records we’ve seen throughout the year, the major indexes decided to step back a bit, reminding everyone that even the strongest bulls need a pause now and then.
I’ve been following these year-end moves for a while, and there’s always this mix of caution and optimism in the air. Traders locking in gains, others hunting for bargains—it’s classic holiday-season trading, just with thinner volumes making every move feel amplified.
A Quiet Start to the Final Trading Week of 2025
The session on Monday wrapped up with the broad market in the red, though nothing too dramatic. It felt more like profit-taking than outright panic. With the new year just around the corner and markets closed on Thursday for New Year’s Day, everyone’s mindset shifts a little.
Overnight into Tuesday, futures were holding steady. Not much movement there—S&P futures barely budging, Nasdaq ones similar, and Dow futures edging up ever so slightly. It’s that calm before we dive into whatever 2026 brings.
How the Major Indexes Closed on December 29
Let’s break it down simply. The benchmark index slipped about a third of a percent, closing around the 6,900 level after flirting with records just days earlier. The tech-focused one dropped half a percent, while the blue-chip average shed a couple hundred points.
Nothing catastrophic, mind you. We’ve seen much wilder swings this year. But back-to-back declines do catch attention, especially after such a strong run.
- S&P 500: Down roughly 0.35-0.4%
- Nasdaq Composite: Down about 0.5%
- Dow Jones Industrial Average: Down around 0.51%, or 249 points
These numbers reflect a market that’s been incredibly resilient in 2025, with double-digit gains across the board. The tech-heavy index leading with over 20% upside, the broad one up around 17-18%, and even the industrials posting solid teens.
Tech Sector Takes the Biggest Hit
If there’s one theme standing out from Monday’s action, it’s the pressure on technology names—particularly those tied to artificial intelligence. Some of the year’s biggest winners gave back ground, and it wasn’t subtle.
Chip giants dropped over 1%, electric vehicle leaders tumbled more than 3%, data analytics firms slid 2-3%. Even broader tech plays felt the pinch. It’s like the market collectively asked: Have we gotten ahead of ourselves on this AI story?
There’s growing chatter about potential overbuilding in AI infrastructure—too much hype chasing limited near-term payoffs.
Market commentator on recent trends
In my view, this kind of rotation happens regularly in bull markets. Money flows from the hot sectors into others, giving leaders a chance to consolidate. Doesn’t mean the long-term thesis changes; it just means valuations get a reality check sometimes.
Think about it. AI has driven so much of the gains this year. Companies building the tools, the chips, the software—all soaring. But when enthusiasm peaks, a little selling pressure isn’t surprising. Perhaps the most interesting aspect is how quickly sentiment can shift on just a quiet trading day.
Materials and Precious Metals Add to the Drag
Beyond tech, the materials sector weighed on things too. Precious metals miners took a beating after a wild ride higher earlier.
One major gold producer plunged over 5%, pacing decliners in the broad index. This came as silver prices had their roughest session in years, pulling back sharply from recent peaks. Gold eased off records as well.
It’s fascinating how interconnected everything is. When commodities cool off—especially after parabolic moves—it ripples into related stocks. Margin adjustments and profit-taking likely played roles here.
- Profit-taking after massive yearly runs in metals
- Exchange margin hikes curbing speculative positions
- Year-end portfolio rebalancing across institutions
Still, the bigger picture for commodities remains constructive for many analysts. Central bank buying, geopolitical tensions—these factors haven’t vanished overnight.
What Traders Are Watching Next
With the calendar flipping soon, the data slate is light but not empty. Tuesday brings some housing figures around 9 a.m. Eastern—always worth a glance for clues on consumer health and rates sensitivity.
Then in the afternoon, we’ll get the detailed notes from the central bank’s last policy gathering. Those minutes often reveal nuances that the headline statement misses—dissenting views, debates on pace of adjustments.
Heading into 2026, expectations lean toward steady policy for now, with possible moves later depending on incoming data. Inflation trends, labor market strength—the usual suspects.
Reflecting on a Remarkable 2025
Zooming out, what a year it’s been. Double-digit advances for all major averages, records tumbling left and right. AI emergence as the dominant narrative, resilient economy defying earlier recession calls.
Sure, there were bumps—tariff talks, rate path debates, brief dips. But overall momentum carried the day. The so-called Santa Claus rally period started with highs, even if the last sessions tempered things.
I’ve found that these late-year pullbacks often set up fresh legs higher. Investors rotate, sidelined cash waits for dips. Not always, of course, but history rhymes more often than not.
| Index | 2025 YTD Gain (approx) |
| Nasdaq Composite | Over 20% |
| S&P 500 | Around 17-18% |
| Dow Jones | About 14-15% |
Pretty impressive when you consider the starting valuations and macro uncertainties.
Is the AI Trade Running Out of Steam?
Getting back to the elephant in the room: artificial intelligence. No denying its impact—revenue surges for key players, valuations stretching to match growth promises.
Monday’s selling in those names sparked talk of bubble concerns. Overbuilding capacity, delayed monetization—valid questions, for sure.
But let’s keep perspective. Infrastructure spend is massive, adoption accelerating across industries. Short-term noise doesn’t erase the multi-year opportunity.
Personally, I see these dips as healthy. They shake out weaker hands, let fundamentals catch up to prices. If anything, they create entry points for patient investors.
- Assess your time horizon—long-term believers weather volatility better
- Diversify across sectors to avoid overconcentration
- Watch earnings reports closely for proof of AI revenue inflection
- Consider dollar-cost averaging on pullbacks
Simple advice, but it works more often than fancy timing strategies.
Broader Market Dynamics at Play
Away from the headlines, other forces shaped the day. Lower volumes typical for holidays, institutional rebalancing, tax-loss harvesting in underperformers.
Sector rotation evident—money moving perhaps toward undervalued areas like industrials or financials after tech dominance.
And don’t forget bonds. Yields dipped slightly, offering some support elsewhere but highlighting rate sensitivity.
Looking Ahead to 2026
As we close the books on 2025, excitement builds for what’s next. Policy clarity, corporate earnings growth, global developments—all in play.
Will AI continue leading? Likely yes, but with broader participation hopefully. Economic resilience has surprised positively this year; no reason to bet against it abruptly ending.
Of course, risks remain—geopolitics, inflation reacceleration, valuation stretches. But markets climb walls of worry, as the saying goes.
Strong years often follow strong years, especially when fundamentals align.
Common market observation
In the meantime, enjoy the holidays. Markets will be here, ready for whatever the new year throws our way. Sometimes the best move is staying invested through the noise.
That’s the beauty of long-term thinking—it turns daily fluctuations into mere footnotes in a bigger story.
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