5 themes that defined business and markets in 2025: Morning Squawk

Happy Wednesday and New Year’s Eve. I’ve decided that there are three main groups of holiday observers this year: Those going to parties or watching the Times Square ball drop at home; those doing late-night workout classes or races; and those going to AMC viewings of the “Stranger Things” finale.

This newsletter normally walks you through five things to know before the market opens. Today, that list would include Federal Reserve minutes that showed a divisive December meeting, and new details about SoftBank’s investment in OpenAI.

But as 2025 comes to an end, we’re taking a step back to instead look at five of the biggest trends that shaped Wall Street, Main Street and Silicon Valley this year.

Here are five themes for investors to consider as they finish out 2025.

Major market indexes surged to all-time highs, and the three major averages are on track for their third straight positive year. But it’s been a bumpy ride: The S&P 500 briefly tumbled into bear market territory in April after President Donald Trump unveiled his tariff plan, some of which he later walked back. The market also scaled walls of worry around artificial intelligence spending and lingering inflation.

Retail investors had a gangbuster year after buying the post-tariff announcement dip, and they’ve shown an appetite for buzzy tech names such as Palantir and Nvidia. Wall Street, meanwhile, is optimistic that stocks will climb even higher in the new year.

Precious metals and crypto have also hit new highs this year. Here’s where the different investment classes stand for 2025, with one trading session remaining:

Companies raced to adjust supply chains ahead of Trump’s broad and steep tariffs on imports from most foreign countries. Some businesses tried to curry favor in Washington, D.C., — to mixed reviews — in a bid to avoid facing the harshest duties. Meanwhile, economists worried that the levies could reignite inflationary pressures and lead to higher prices for consumers, while small businesses said that they can’t absorb cost increases like larger firms can.

But the fate of Trump’s trade policy now hangs in the balance, as the world waits for the Supreme Court’s decision on whether the new tariffs are legal. White House officials have said there are other ways to implement the vast duties, even if the nation’s highest court rules against the president.

AI titans including Nvidia and OpenAI struck multibillion-dollar deals with companies focused on hardware and data centers — and even with each other — as they raced to meet booming demand. AI once again captured the imagination of Wall Street, prompting investors to jump into stocks tied to the trade.

But the sector also picked up its fair share of skeptics. Chief among critics’ concerns: an AI bubble that could pop. Such an event would mark a paradigm shift for a stock market and U.S. economy increasingly reliant on spending tied to AI.

The U.S. Federal Reserve and its policymakers took center stage in 2025, as Trump waged a pressure campaign on the central bank to lower interest rates. The Fed cut interest rates three times this year, bringing the key overnight borrowing rate in a range between 3.5%-3.75%. Still, the president called for more.

Trump has said he’d “love to fire” Chair Jerome Powell, which would be an unprecedented and — as the Supreme Court indicated — legally dubious move. He went even further in August, when he attempted to fire Fed Governor Lisa Cook, citing allegations of mortgage fraud. The Supreme Court has allowed Cook to remain in her position while she challenges the firing.

Some Fed watchers worry that Trump could get the Fed influence he wants in 2026: Powell’s term as chair ends in May, and Trump will have the chance to nominate his pick for the central bank’s next leader. There’s significant disagreement among voting members on the path forward for interest rates as the Fed contends with a stalling labor market and lingering inflation. Its next chair could be a decisive vote.

When it came to the U.S. consumer in 2025, one letter told the story. The “K”-shaped economy became the go-to descriptor for an economic environment in which the best-off consumers are splashing out, while lower-earners buckle under higher costs.

An ode to how the two ends of the economic spectrum diverged in opposite directions, the “K”-shaped economy helps explain, for example, why airlines rushed to build out premium offerings at the same time that fast-food chains pushed value-focused menu items.

Meanwhile, the “low hire, low fire” job market became increasingly hard to ignore. Recent college grads in particular felt the pinch, and economic policymakers fretted about slowing labor growth. That contributed to a year of bad vibes for the economy, with everyday Americans reporting some of the lowest levels of consumer sentiment on record. A historically long government shutdown didn’t help, either.