Despite a sharp tariff-led shock and a prolonged Federal Reserve pause, the US stock market, including the Dow 30, S&P 500, and Nasdaq 100, concluded 2025 at record highs. The S&P 500 experienced a significant slump following former President Trump's tariff announcements but recovered strongly, posting a 16% gain for the year. Market sentiment improved as the severity of trade wars appeared less than initially feared, though the Federal Reserve maintained higher interest rates.