Investment Outlook: Winter 2025

By Argent Wealth Management, LLC on January 7, 2026

Fourth Quarter Review, First Quarter Outlook

Health Care Aids Market in Solid Fourth Quarter

Stocks continued to rise in the 4^th quarter, albeit at a slower pace than Q3. Overall, the S&P 500 gained 2.3%. Financials were the 2^nd best sector, up 2.6% thanks to robust capital markets activity & calmer interest rates, while Healthcare, which offers a mix of growth & safety, led the way by rising 7.9%. Technology, up 1.2%, cooled off from its typically blistering pace, as some on Wall Street questioned the ROI of expensive data center buildouts and new large language models. Although not every company will emerge a winner, we see the advent of artificial intelligence as a profit boost for firms, who will be able to shift employees into higher value-added roles. AI is likely to revolutionize industries such as healthcare & retail in the coming years, and the need for the U.S. to maintain an edge over China in technology for national security purposes will create a runway for continued investment and federal government support. Real Estate was the poorest performer this quarter, falling 4.2% as demand for several different property types remained sluggish. These sort of sector rotations are healthy market activity, as durable rallies see all parts of the market participate as an indication of broad-based economic growth. For 2025 as a whole, the S&P 500 rose 16.7%, with Tech leading the way at 24.1% and Consumer Staples standing alone in the red, down 0.9%.

Fig. 1: Healthcare was the Clear Market Leader in Q4, Spurred by Greater Policy Clarity for Big Pharma

Fed Turmoil Overshadows Steady Cut Pace, Rosy Economic Projections

Headlines about comings and goings on the Federal Open Market Committee sometimes overshadowed the economic projections being set forth by the Fed’s members this Fall. President Trump has mused about firing Chairman Jay Powell and launched an investigation into Fed Governor Lisa Cook for mortgage fraud. In addition, there have been a few other resignations of FOMC voting members, creating high uncertainty for the trajectory of U.S. monetary policy. New Trump appointee Stephen Miran initially diverged greatly from other policymakers, preferring rapid cuts. However, in their recent Summary of Economic Projections, FOMC members forecasted contained inflation, steady employment, and economic growth around 2%. In addition, Miran and other dovish Fed members such as Christopher Waller got their way with two recent rate cuts and are now willing to be more patient. There is still uncertainty over who the next Fed chair will be, and the markets are a bit frightened of Trump ally Kevin Hassett taking the big seat. However, we should primarily focus on the Fed’s outlook for a steady economy and continued gradual pace of rate cuts when deciding how to allocate assets.

Fig 2: The Fed Forecasts Steady Economic Stats in the Coming Years

International & Small-Cap Stocks Deliver for Balanced Investors

U.S. large-cap growth stocks attract the lion’s share of investor attention, and for good reason. However, it pays to spread your exposure around, as there are still certain innings in a market cycle when other groups such as Small-Cap or Emerging Markets will have their time to shine. These groups largely kept pace with the S&P 500 this quarter. Emerging Markets had the wind at their back this year-greater attention on ex-U.S. equities due to a weaker dollar, strong commodity prices, and low valuations helped create an attractive set-up. Small Caps started slow, but gained steam once more clarity on the scope of Trump’s tariffs was available. Easing interest rates and a major uptick in mergers & acquisitions (smaller companies are often purchased by larger ones at hefty premiums, juicing the returns of smaller-cap indexes) gave those stocks extra ballast. Also shown below for comparison is the All-Country World Index, which as the name suggests provides a snapshot of global equity performance.

Fig 3: Small-Cap & International Stocks Performed In-Line with Large-Cap U.S. Stocks in Q4

Gold Gains, Bitcoin Backslides

The sleepy precious metals market does not get much ink. That changed in 2025, when commodities such as gold & silver topped equity returns. As measured by the iShares Silver Trust, Silver was up a staggering 145% while the most commonly traded Gold ETF from State Street rose 64%. Elsewhere, after a yearslong bull run, Bitcoin took a breather in 2025, falling 8% as measured by the Grayscale Bitcoin Trust. Bitcoin remains a superior store of value than other cryptocurrencies, but it is still prone to bouts of volatility. Precious metals tend to operate in longer-run cycles, as changes in sentiment & supply are slower to transmit in the commodity markets compared to stocks. As global central banks seek to add more gold to their reserves, we could see a longer rally, although short-term indicators point to the yellow metal being overextended, as shown below.

Fig 4: Gold Embarked on a History-Making Rally in 2025

Smart Investors Stay Vigilant, Even in Strong Cycles

Even when the market is rocking, the best investors survey the landscape and take note of risks on the horizon. We cannot predict with any great accuracy shifts in individual sectors or stocks when previewing an entire year. However, we can look at the calendar and circle some important dates when market-moving news is scheduled to be released. As mentioned before, Chair Jerome Powell’s term expires in May, but Trump will announce his replacement well in advance, at an undisclosed date. The reciprocal tariffs imposed under emergency orders last April are under review by the Supreme Court and could be decided within the next few weeks. Tariffs placed on national security grounds will remain intact, but this ruling could threaten government revenue.  It is worth noting that government funding lapses again on January 30^th. Although it feels like we just rode out a long shutdown, the measure that was implemented to end it was a classic “kick the can down the road” agreement. Congress still needs to come up with a fix to the thorny issue of Affordable Care Act subsidies. Finally, November 3 brings us the Midterm Elections. While the GOP is heavily favored to maintain the Senate, Democrats have the clear advantage to regain the House, given Trump’s soft approval ratings and a seemingly successful ploy to change district lines in California in the blue team’s favor. AI developments & earnings data are more important for markets, without a doubt, but it pays to have a good read on events that are already set in stone. Finally, let’s check in quickly on investor sentiment as measured by Ned Davis Research-investors remain broadly upbeat heading into the new year, although historically that type of complacency has led to weaker equity returns.

Sources:

Fig. 1: Factset, Argent Wealth Management, LLC © 2026 on 1/2/2026
Fig. 2: Federalreserve.gov on 1/2/2026
Fig. 3: Factset, Argent Wealth Management, LLC © 2026 on 1/2/2026
Fig. 4: Ned Davis Research, Inc. on 1/2/2026
Fig. 5: Ned Davis Research, Inc. on 1/2/2026