December 2025 Index Returns



In stocks (equities):

  • The U.S. stock market finished 2025 with flat performance last month (Russell 3000 Index). And even though the holiday season did not bring the hoped-for Santa Claus rally, the S&P 500 index squeaked out another month of gains, albeit small at +0.1%, bringing the index's positive performance streak to eight consecutive months. Last month also saw U.S. stock markets favor cheaper value stocks over more expensive growth stocks across the market cap spectrum with small-cap value stocks (+0.2%, Russell 2000 Value Index) and large-cap value stocks (+0.7%, Russell 1000 Value Index) gaining and small-cap growth stocks (-1.3%, Russell 2000 Growth Index) and large-cap growth stocks (-0.6%, Russell 1000 Growth Index) depreciating.
  • No matter last month's performance, large-cap growth stocks were the best performing U.S. stock asset class in 2025 returning +18.6% for the year.
  • International developed stock markets as measured by the MSCI World ex USA index gained last month (+3.0%) and was partially supported by a decline in the U.S. dollar. International developed large-cap value stocks gained the most last month among global ex-U.S. stocks (+4.3%, MSCI World Ex USA Value index). For all of 2025, international developed large-cap value stocks have posted the best performance of any international developed stock index (+42.2%) and have outpaced the S&P 500 index by 24.3%.
  • Another notable year-end figure for international developed stocks: the MSCI World ex USA index outpaced the S&P 500 by +14.0% in 2025, which is a first of this magnitude since October 2009 on a rolling 12-month basis.
  • Emerging markets stocks as measured by the MSCI Emerging Markets index were up +3.0% last month and on the year at +33.6%.

In fixed income (bonds):

  • The Federal Reserve's rate setting body, the Federal Open Market Committee (FOMC), cut interest rates by 0.25% during their final meeting of the year last month, marking the third time they have lowered rates during 2025. Notes from this December meeting show that most FOMC members believe that rates can be reduced further if inflation shows a meaningful and sustained decline but that further near-term rate cuts are still highly uncertain. According to CME FedWatch, markets currently expect two rate cuts in 2026.
  • Bond returns in Treasuries and corporates were positive for short-term maturities last month but negative for intermediate and long-term maturities as yields rose across longer-dated portions of the yield curve. Municipal bonds were positive across all maturity segments.
  • The Bloomberg U.S. Aggregate Bond Index was down -0.1% last month but finished the year up +7.3%.
  • Outside of the U.S., the Bloomberg Global Agg ex-US (hedged to USD) Index was down -0.3% last month and finished the year at +2.8%.

Despite ongoing swings in the U.S. stock market and elevated geopolitical risks worldwide, a globally balanced 60/40 portfolio has gained +15.1% year-to-date. This underscores the value of diversification and the importance of staying focused on the factors within our control.


As always, please let us know if you have any questions by emailing support@xyinvestmentsolutions.com.


As an additional note, please keep in mind that these reflect historical performance of the current models, not necessarily how accounts were invested in the past.