4Q25 Quarterly Market Review
Quarterly Market Review
Markets closed 2025 on solid footing, finishing a year that rewarded investors who stayed patient through shifting narratives and short-term volatility.
Global equity markets rose during the fourth quarter, extending gains that built steadily throughout the year. In the U.S., broad stock market indices moved higher to finish the year with double-digit returns. International markets were even stronger, with both developed and emerging market stocks posting outsized gains relative to the U.S.
While the path wasn’t smooth, the overall story of 2025 was one of resilience.
What We'll Cover
Key Takeaways
Markets finished 2025 with strong gains, even as volatility, policy shifts, and economic concerns persisted throughout the year.
International stocks led returns, marking a notable change after several years of U.S. dominance.
Federal Reserve rate cuts helped support markets as inflation cooled and growth moderated.
Bonds delivered positive returns and resumed their role as a stabilizing part of portfolios.
Artificial intelligence continued to drive market enthusiasm, though its impact was felt broadly rather than in just a few headline stocks.
What the Headlines Don’t Show
MSCI All Country World Index with selected headlines from 2025
These headlines are not offered to explain market returns. Instead, they serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.
In USD. MSCI All Country World Index, net dividends. MSCI data © MSCI 2025, all rights reserved. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Headlines are sourced from various publicly available news outlets and are provided for context, not to explain the market's behavior.
Market Summary
Returns as of December 31, 2025
2025 wasn’t a calm year, but markets still moved forward. U.S. stocks finished higher despite concerns around inflation, interest rates, the labor market, and election-year headlines. As inflation eased and the Federal Reserve began cutting rates in the second half of the year, markets responded positively.
Leadership shifted throughout the year. Some sectors performed well early, while others performed well later. Interest in artificial intelligence continued, but gains showed up across many areas of the market, not just a few headline names. The broader takeaway is that progress didn’t depend on perfect conditions.
Looking Beyond the U.S.
One of the more important developments this year was the strength of markets outside the U.S. Both developed and emerging markets delivered strong returns, outpacing U.S. stocks. A combination of improving growth, easing inflation, and more supportive central bank policies helped drive results.
This shift was a useful reminder that opportunities don’t stay in one place forever. Owning investments beyond the U.S. helped in a year when leadership changed.
Bonds Added Balance Again
After several difficult years, bonds were more helpful in 2025. As interest rates fell, bond prices rose, and income became more predictable. While returns varied across bond types, fixed income once again provided balance within portfolios.
What Matters Most
Markets pulled back at times, and headlines created plenty of noise. That’s normal. What mattered most this year was staying invested and avoiding reactionary changes. Investors who remained focused on their long-term plans were generally in a better position than those who tried to sidestep short-term uncertainty.
Markets don’t need calm conditions to make progress. They need time. And progress often happens quietly, long before it feels comfortable.
Progress Through the Noise
Markets rose while investors waited for a reason to panic
Q4 capped off a year where markets did what they often do best: rise while investors prepared for disaster. Despite political noise, policy debates, and no shortage of “this time is different” commentary, global stocks finished the quarter higher. Bonds participated as well, adding stability rather than stress, a welcome change from recent years. The key lesson wasn’t subtle: markets don’t wait for certainty, and they rarely reward those who insist on it. Wise investors know that volatility is the price of entry. Once again, the wall of worry turned out to be more of a ladder than a barrier.
U.S. stocks: three years of gains, zero years of calm
U.S. stocks closed out their third straight year of gains, which sounds great on paper until you remember how bumpy the ride truly was. Q4 reinforced that pullbacks and volatility are not malfunctions; they are standard features. Market leadership broadened somewhat, while some longtime highfliers took a well-earned breather. Investors hoping for a smooth, drama-free rally were disappointed, but those who stayed invested were rewarded. Markets continue to charge a volatility toll for long-term returns, and that toll remains non-negotiable.
International stocks remind everyone the U.S. isn’t the whole world
If 2025 delivered one clear lesson, it’s that ignoring international markets can be an expensive habit. Developed and emerging market stocks outpaced U.S. stocks, supported by currency effects, valuation differences, and broader participation. This wasn’t a one-country wonder. Performance was spread across multiple regions and sectors. Investors with global exposure benefited, while home-biased portfolios lagged and asked uncomfortable questions afterward. Diversification did its job quietly, as usual, without asking for credit.
Bonds did what bonds are supposed to do (finally)
After a frustrating stretch, bonds returned to its core purpose: generating income and smoothing portfolio volatility. Bond returns were solid across much of the yield curve, aided by easing rate pressure late in the year. No one is confusing bonds with stocks again, and that’s exactly the point. For diversified portfolios, bonds quietly improved risk-adjusted outcomes without demanding attention or headlines. Sometimes boring is not just acceptable; it’s highly effective (and desirable).
The economy refused to cooperate with recession forecasts
Economic data in Q4 painted a familiar picture: slower growth, cooling inflation in some areas, and a labor market that softened but never broke. Consumer spending proved more resilient than many expected, even as confidence readings fluctuated. It wasn’t a boom, but it also wasn’t the downturn many forecasts had confidently penciled in. The economy continued to muddle through, which turned out to be perfectly investable. Markets appear comfortable with “good enough,” even if commentators are not.
Taxes, policy, and the long game
The so-called “One Big Beautiful Bill” generated plenty of headlines, but far less immediate market impact than the noise might suggest. Tax and policy changes matter, but they tend to influence market outcomes over years rather than quarters. The real effects will show up through incentives, planning strategies, and longer-term business behavior. Investors trying to trade on legislative news often end up reacting twice and with nothing to show for it. Coordinating tax strategies and financial planning remains far more effective than headline-driven portfolio changes.
The year’s real takeaway: discipline still wins
By the end of 2025, the core lesson was familiar but no less important: staying invested beat trying to be clever. Markets advanced despite uncertainty, volatility, and a steady stream of reasons to wait on the sidelines. Those “better entry points” predictably appeared only after prices had already moved higher. Diversification, rebalancing, and patience once again outperformed conviction and market timing. Not flashy, with little-to-no sizzle, but incredibly effective.
What works doesn’t stop working just because the headlines change.
Looking Ahead to 2026
As we head into 2026, the picture looks familiar. There are real opportunities ahead, along with plenty of uncertainty. Inflation has eased from its highs but remains above longer-term goals. Growth appears slower, though still positive. Interest rates are lower than they were a year ago, and policy decisions will continue to influence markets.
Rather than trying to predict exactly how the year will unfold, we recommend staying focused on a few principles that tend to hold up over time:
Owning a mix of investments matters because different parts of the market don’t move in lockstep.
Trying to jump in and out of the market is harder than it sounds, especially when conditions are uncertain.
Sticking to a plan over time matters more than getting every decision exactly right.
Being invested has historically mattered more than waiting on the sidelines.
Final Thoughts
Every market cycle gives investors reasons to second-guess. 2025 had plenty of them, and 2026 will bring its own. What stood out wasn’t a lack of uncertainty, but how consistently markets rewarded investors who stayed steady. Those who kept investing and stayed focused on fundamentals generally came out ahead. Those who waited for clarity often missed the move.
We still hear calls to step aside, wait for a pullback, or re-enter when conditions feel safer. In practice, those decisions are much harder to get right than they sound. By the time uncertainty fades, markets have usually already adjusted. Comfort and opportunity rarely arrive together.
Our approach hasn’t changed. Volatility is part of investing. Being prepared for it and continuing to invest through it is how long-term progress happens. Staying invested matters. Letting time and compounding do their work matters most.
Markets will stay noisy. Progress usually happens quietly.
Disclosures
All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. The content on this blog is for informational and educational purposes only and should not be construed as personalized financial advice, tax advice, legal advice, an offer or solicitation to buy or sell any security, or a recommendation to pursue any specific investment strategy. The information provided is general in nature and may not be suitable for your individual circumstances.
Olio Financial Planning, LLC (“OLIO”) is a registered investment adviser with the United States Securities and Exchange Commission, domiciled in Virginia. Investment advisory services are only provided to investors who become OLIO clients under a written agreement. Past performance does not guarantee future results, and all investments involve risk, including the potential loss of principal.
Nothing contained herein should be interpreted as a guarantee of any specific outcome. Forward-looking statements or projections are based on assumptions and current market conditions, which are subject to change without notice. Actual results may differ materially.
You should consult your own financial, legal, tax, or other professional advisors before making any financial decisions. OLIO does not guarantee that the information presented is current, accurate, or complete, and assumes no responsibility for any errors or omissions.