Insights

The S&P 500 ended up 16.65% for the year, marking three consecutive years of double-digit gains. Despite challenges such as a prolonged U.S. government shutdown, continued tariff costs, and geopolitical tensions, the stock market finished squarely in positive territory. The U.S. Federal Reserve continued lowering interest rates in December, bringing the 10-year Treasury Note to 4.17% at year-end, compared to 4.62% at the end of 2024.

One of the major drivers of market enthusiasm in 2025 was the race to develop Artificial Intelligence. Information technology companies invested billions to secure competitive advantages in this transformative technology. However, toward year-end, we observed a rotation away from the IT sector as investors questioned high valuations among companies that have yet to demonstrate meaningful returns on AI spending. This broadening of market leadership is a welcome development, with hopes it continues into the new year.

Although the extended federal government shutdown during the last quarter raised concerns, economic growth proved resilient. Third-quarter GDP numbers were strong, and fourth-quarter results are expected to be robust. Looking forward to 2026, the mid-term elections should incentivize both political parties to keep the economy moving forward and the federal government open. Many economists anticipate that, in addition to consumer spending boosted by the “OBBB,” the U.S. economy will benefit from events surrounding the 250th anniversary of the signing of the Declaration of Independence and the World Cup Soccer tournament in North America next year.

Looking ahead, investors expect a new Federal Reserve Chairman to be named in early January to replace Jerome Powell, whose term is expiring. The Fed Chair plays a critical role in shaping interest rate policy, and markets may react in the short term to this appointment. Broadly, the markets hope the downward trend in rates will continue.

Finally, we are excited to announce we, The Ingersoll Koesters Group, were recently recognized by Forbes/SHOOK Research as a 2026 Best-In-State Wealth Management Team*.

Our team wishes you a happy, healthy, and prosperous New Year. Thank you for your continued trust and partnership.

*2026 FORBES | SHOOK Research Best-in-State Wealth Management Teams. Published 1/7/26, rankings based on data as of 3/31/25