U.S. stocks are slipping in afternoon trading Wednesday as Wall Street closes out a banner year for markets driven by both optimism and uncertainty.
The S&P 500 was down 0.2%. The Dow Jones Industrial Average fell 100 points, or 0.2%, as of 1:47 p.m. Eastern time. The Nasdaq composite fell 0.1%. The stock indexes are coming off a three-day losing streak.
Trading is expected to be light ahead of the New Year’s Day holiday, when markets will be closed. With just one trading day left before the year ends, most big investors have closed out their positions for the year and trading volume has been very thin.
Even after their mini post-Christmas pullback, the indexes are on pace for strong gains for the year.
The S&P 500, which set 39 record highs in 2025, is up about 17% for the year, it’s third straight double-digit annual gain. The Nasdaq is up 21.1% and the Dow has gained 13.4%.
Wall Street’s 2025 gains came as investors embraced the optimism surrounding artificial intelligence and its potential for boosting profits across almost all sectors. But the market had no shortage of turbulence along the way amid President Donald Trump’s on-again, off-again tariffs on imported goods worldwide and uncertainty over the trajectory of interest rates.
The S&P 500 plunged nearly 5% on April 3, it’s worst day since the 2020 COVID crash. It fell another 6% a day later, after China’s response raised fears of an escalating trade war. Worries also gripped the U.S. Treasury market.
Trump eventually put his tariffs on pause and negotiated agreements with countries to lower his proposed tariff rates on their imports, helping calm investors’ nerves.
Strong profit reports from companies and three cuts to interest rates by the Federal Reserve also helped drive markets higher.
Still, the AI frenzy that drove markets in 2025 did not come without concerns. Chief among them is the worry that artificial intelligence technology may not produce enough profits and productivity to make all the investment worth it. That could keep the pressure on AI stocks like Nvidia and Broadcom, which were responsible for much of the market’s gains this year.
And it’s not just AI stocks that critics say are too pricey. Stocks across the market still look expensive after their prices climbed faster than profits.
On top of concerns that stocks are overvalued, the ongoing impact of the wide-ranging U.S.-led trade war threatens to add more fuel to inflation in the U.S. Despite the Fed cutting rates over concerns about the labor market, inflation remains solidly above the central bank’s 2% target.
Wall Street is betting that the Fed will hold interest rates steady at its next meeting in January.
Traders got an update on the state of the job market Wednesday. The Labor Department reported that fewer Americans applied for unemployment benefits last week with layoffs remaining low despite a weakening labor market.
All of the sectors in the S&P 500 were in the red Wednesday, with technology stocks among the biggest drags on the market. Western Digital fell 2.1% and Micron Technology was down 1.5%.
Treasury yields were mostly higher in the bond market. The yield on the 10-year Treasury rose to 4.16% from 4.13% late Tuesday. The yield on the two-year Treasury, which moves more closely with expectations for what the Federal Reserve will do, rose to 3.47% from 3.45%.
Trading in precious metals continued to be volatile as the year winds down. Silver swung back to a big loss, giving back 9.1% after Tuesday’s gain of more than 10%. Following Friday’s 7.7% jump, silver lost nearly 9% on Monday. It’s still up more than 140% this year.
Gold was down 1.2%, but is still up about 64% in 2025.
U.S. benchmark crude slipped 0.7% to $57.55 per barrel. The price of Brent crude, the international standard, fell 0.6% to $60.97 per barrel.
Global stock markets including those in Germany, Japan and South Korea were closed Wednesday for the New Year’s holidays, while trading was mixed in those that remained open.
—Alex Veiga, AP business writer