By Purvi Agarwal, Nikhil Sharma and Saeed Azhar Dec 31 (Reuters) – Wall Street's major indexes inched lower in the final trading session of 2025, but approached a positive end to a roller-coaster year dominated by President Donald Trump's tariff uncertainties and a euphoria around AI-focused stocks. The S&P 500, Dow and Nasdaq were on track to log double-digit gains this year. It would mark their third consecutive year in the green, a run last seen during 2019-2021. The S&P 500 and the Dow are set to close their eighth straight month of gains, their longest such streak since 2017-2018. The rally was bolstered by an insatiable appetite for artificial intelligence stocks that pushed all three indexes to record highs this year. On the day, tech stocks slipped 0.1%. Microsoft was down 0.2% and Apple was flat, the biggest weights on the sector. "I do not expect that the last few days will have so much bearing on the performance of the next year, it's perfectly fine in any bull market to have moments of cost," said Giuseppe Sette, co-founder and president of Reflexivity, pointing to profit-taking opportunities when liquidity was low. At 1:47 p.m. the Dow Jones Industrial Average was down 92.79 points, or 0.19%, to 48,274.27, the S&P 500 lost 10.56 points, or 0.15%, to 6,885.68 and the Nasdaq Composite lost 27.15 points, or 0.12%, to 23,392.05. Wall Street made a stellar comeback from April's lows when Trump's 'Liberation Day' tariffs sparked a meltdown in global markets, sent investors away from U.S. stocks and threatened growth by clouding the interest rate outlook. Still the benchmark S&P 500 index's 16.9% gain is below some global indices, especially the Asia-Pacific ex-Japan measure, which rallied nearly 27% in 2025, as stock investors diversified. "We expect this broadening of performance to deepen in 2026, both within the U.S. and across international markets," said Jitania Kandhari, Deputy CIO of the solutions and multi-asset group at Morgan Stanley Investment Management. "The era of narrow winners is giving way to a wider, more globally distributed opportunity set. Equal-weighted S&P looks good relative to cap-weighted S&P." Wall Street was looking at a fourth consecutive session of losses, confounding expectations for a "Santa Claus rally" in which the S&P 500 typically gains over the last five trading days of December and the first two in January, according to the Stock Trader's Almanac. Bellwether chipmaker Nvidia – up about 40% year-to-date – has been one of the many AI trade beneficiaries, becoming the first publicly traded company to hit a $5 trillion market capitalization. The communication services index emerged as the top performer on the S&P 500 this year, powered by a 66% jump in Alphabet, nearing its best yearly performance since 2009. Storage chip makers such as Micron Technology, Western Digital and Seagate are set to outperform their S&P 500 peers, having more than tripled in value in 2025. On the flip side, FMC Corp and Fiserv lagged peers, down 71% and 67%, respectively, for the year. The Federal Reserve's monetary policy trajectory will set the tone for global markets in 2026, after recent economic data and expectations of a new dovish Fed chair prompted investors to price in further reductions. Nike gained 4.4% after CEO Elliott Hill reported that he bought about $1 million worth of shares recently. Vanda Pharmaceuticals surged 28% after the U.S. Food and Drug Administration approved its drug for the prevention of motion-induced vomiting. Trading volumes remained thin in the holiday-shortened week, with markets closed on Thursday for New Year's Day. Declining issues outnumbered advancers by a 2.56-to-1 ratio on the NYSE. There were 69 new highs and 88 new lows on the NYSE. On the Nasdaq, 1,711 stocks rose and 2,912 fell as declining issues outnumbered advancers by a 1.7-to-1 ratio. The S&P 500 posted 2 new 52-week highs and no new lows while the Nasdaq Composite recorded 23 new highs and 178 new lows. (Reporting by Purvi Agarwal and Nikhil Sharma in Bengaluru; Editing by Krishna Chandra Eluri and David Gregorio)
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