U.S. equities experienced a downturn in afternoon trading on Monday, December 29, 2025, as investors engaged in profit-taking during a holiday-shortened week, cooling off from recent rallies. Major market indexes were broadly lower, with particular pressure on heavyweight technology stocks, while the energy sector showed resilience. This cautious sentiment prevails as the market approaches the close of a tumultuous yet ultimately rewarding year, with an eye on key economic data and policy decisions slated for early 2026.
Major Market Indexes Reflect Year-End Caution
As of afternoon trading, the S&P 500 was down approximately 0.5%. The benchmark index, despite today's pullback, remains up more than 1% for the year and is on track for its eighth consecutive monthly gain. The Dow Jones Industrial Average also slipped, falling around 249 points, or 0.5%. This retreat from recent historic peaks marks a notable departure from the "Santa Claus rally" that characterized much of December, as thin holiday trading volumes amplify price movements. The tech-heavy Nasdaq Composite bore the brunt of the selling, declining by about 0.6%. This follows Friday's session, where the Dow Jones Industrial Average (DJI) fell 0.04% to close at 48,710.97, the S&P 500 (SPX) lost 0.03% to end at 6,929.94, and the Nasdaq Composite (IXIC) declined 0.1% to 23,593.10. The CBOE Volatility Index (VIX), a gauge of market fear, increased by 1% to 13.60 on Friday, indicating a slight uptick in investor apprehension.
Sectoral Performance: Energy Shines, Tech Under Pressure
Afternoon trading saw a clear divergence in sector performance. Technology shares, which have been a primary driver of market gains throughout 2025, were among the heaviest weights on the market, leading declines. This suggests investors are becoming more skeptical about whether the eventual payoff from hefty investments in artificial intelligence will justify current valuations.
Conversely, the Energy Sector proved to be a bright spot, outperforming other industries with shares up approximately 1%. This surge was largely attributed to rising crude oil prices, with U.S. benchmark crude jumping 2.3% to US$58.08 per barrel. Major oil companies like Exxon Mobil (XOM) saw their shares rise by 1.5%. The Materials Sector was the worst performer, down 1.1%. On Friday, Consumer Discretionary (XLY), Financials (XLF), and Communication Services (XLC) also ended in negative territory, while Materials (XLB) had seen a slight rise.
Upcoming Market Events to Watch
As 2025 draws to a close, market participants are keenly awaiting several key events that could set the tone for the new year:
- FOMC Meeting Minutes: The minutes from the Federal Open Market Committee's December meeting are scheduled for release on Tuesday, December 30, 2025. Investors will scrutinize these minutes for further clues on the Federal Reserve's stance on monetary policy, particularly after the Fed delivered its third consecutive interest rate cut earlier in December, bringing the federal funds rate to a range of 3.50%–3.75%.
- Economic Data: U.S. initial jobless claims data will be released on Wednesday, December 31, 2025. Additionally, the U.S. manufacturing PMI for December is due on Friday, January 2, 2026. More broadly, the crucial January jobs report and December CPI (Consumer Price Index) data are anticipated early in the new year.
- Government and Policy Risks: A potential U.S. partial government shutdown looms, with funding set to expire on January 30th, 2026. Furthermore, a Supreme Court decision regarding IEEPA tariffs could emerge at any time in January, potentially introducing trade-related volatility. The appointment or guidance from a new Fed Chair also points to early January.
Major Stock News and Corporate Developments
Several individual stocks made headlines in today's trading:
- Nvidia (NVDA) shares, despite a recent surge, pulled back by 1.6% to 1.7% in afternoon trading, leading early Dow decliners. This comes even as the company had seen a 1% rise earlier after agreeing to license AI chip technology from startup Groq. The broader tech sector is facing some profit-taking and skepticism regarding AI valuations.
- Tesla (TSLA) stock was notably lower, down 2.6% on Monday.
- Target Corporation (TGT) saw its shares climb 3.1% following reports that a hedge fund had built a significant stake in the retailer.
- Coupang, Inc. (CPNG) shares surged 6.5% after the company reassured investors that a cyber issue had been resolved with minimal impact.
- American Airlines Group Inc. (AAL) experienced a 1.5% decline in its stock price, attributed to concerns over potential flight disruptions caused by a winter storm.
- McDonald's Corporation (MCD) was among the major losers in the Dow on Friday, with its stock price falling 0.9%.
- Micron Technology (MU) stood out as the best-performing stock in the S&P 500, with shares up approximately 2.5%.
- DigitalBridge Group (DBRG) saw a significant jump of 10% after Japanese conglomerate SoftBank acquired the data-center investment firm for $4 billion.
- Lululemon Athletica (LULU) climbed 1.4% amid reports that its founder, Chip Wilson, had launched a proxy fight to appoint three directors to the apparel company's board.
- In the commodities market, gold and silver prices retreated significantly on Monday after reaching recent highs. Gold fell 4.5% and silver sank 8%, as investors locked in profits on these precious metals. Newmont Corporation (NEM), a leading gold miner, was the worst-performing stock in the S&P 500, down 6%.
As the final trading days of 2025 unfold, markets are navigating a period of rebalancing and cautious optimism. While the underlying bull market remains intact, investors are clearly reassessing valuations, particularly in the tech sector, and preparing for a new year that promises a fresh set of economic and policy challenges.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.