The Great Shift in the 2025 Financial Market: Policy Shift, Technological Empowerment, and Asset Revaluation in a Perfect Storm

In 2025, the global financial markets experienced an unprecedented upheaval. As the S&P 500 closed the third year with near-record gains, the underlying logic driving the market was far more complex than the surface numbers suggested. From policy shocks to technological empowerment, and to extreme asset volatility, this year reshaped investors’ risk perceptions.

Policy-Driven: From Tariff Impacts to Policy Easing

At the beginning of the year, Trump was sworn in for his second term, accompanied by a series of executive orders that sent market sentiment on a rollercoaster. Particularly, the sudden announcement of the global “Liberation Day” tariff policy in April triggered the most severe weekly adjustment since the pandemic— the S&P 500 plummeted nearly 10% over two trading days, with a maximum drawdown approaching 20%, nearly triggering a bear market.

The market’s sharp reaction ultimately prompted policy adjustments. Trump announced a 90-day tariff suspension, reducing reciprocal tariffs significantly to 10%. This statement sparked the strongest single-day rebound in financial history— the Nasdaq Composite surged 12%, the S&P 500 rose nearly 10%, and the Dow Jones Industrial Average set a record for the largest single-day point gain. Trump himself admitted that the market’s “overreaction” was an important consideration in policy adjustments.

By the end of the year, moderate tariff reductions on China further stabilized market expectations, providing strong support for the year-end rebound in U.S. stocks. Meanwhile, after a year of interest rate freezes, the Federal Reserve finally launched a rate-cutting cycle in September, reducing rates by a total of 75 basis points for the year, providing liquidity support for stocks, bonds, and other assets.

Technological Empowerment: The AI Boom Continues to Rise

Although Trump announced the “Star Gate Plan” worth $500 billion on his first day in office, the real market mover was the AI ambitions of Silicon Valley giants. Google, Amazon, Metaverse, and Microsoft, the four major cloud service providers, pledged over $300 billion annually to develop AI, while external investors injected over $150 billion into startups.

Nvidia, driven by exploding demand for AI chips, temporarily became the first company in history to surpass a $4 trillion market cap mid-year, and further broke the $5 trillion mark by year-end. The CEO of this chip giant, Jensen Huang, thus became a top global celebrity, even sparking discussions around the “Fried Chicken Concept Stocks.”

However, the frenzy around AI investments also raised concerns. Nvidia’s billion-dollar cooperation agreement with OpenAI marked a milestone in AI infrastructure development but also triggered widespread market doubts about “circular financing” and its sustainability. Oracle’s unfulfilled order revenue surged to $455 billion, mainly relying on its partnership with OpenAI, and concerns about the relationship between the two continued to rise throughout the year.

Crypto Assets: From Record Highs to Major Corrections

Bitcoin continued its strong performance from 2024, hitting a new high of $109,000 on the eve of Trump’s inauguration. Mid-year, it even broke through the $125,000 mark, setting a historical record. But this rally was not sustained— especially during the massive crypto market shock in October, when Bitcoin plunged over 12% within minutes, forcing the liquidation of billions of dollars in leveraged positions. By year-end, Bitcoin finally fell below $100,000 and failed to recover.

As of early 2026, Bitcoin traded in the $90.65K range, still far from its all-time high of $126.08K. This volatility vividly reflects the high fluctuation characteristic of the crypto market, causing significant impacts on asset managers following aggressive strategies.

In contrast, precious metals performed remarkably well. Gold gained over 50% for the year, marking its best annual performance since 1979, and first broke through $4,000 per ounce in October. Silver prices doubled. This trend reflected growing investor concerns over geopolitical risks and collective expectations of fiat currency devaluation.

Mergers & Acquisitions: Reshaping the Media Industry

Hollywood experienced its most intense M&A battles in decades. Netflix’s $82.7 billion acquisition of Warner Bros. Discovery triggered a strong counterattack from Paramount— Paramount subsequently made a higher all-cash bid of $108 billion, backed by Oracle CEO Larry Ellison’s personal guarantee of $40.4 billion. This capital feast is set to reshape the global media landscape.

Leadership Changes: Power Transitions Initiated

Warren Buffett announced at Berkshire Hathaway’s 60th Annual Shareholders Meeting that 2025 would be his final year leading the company, with Greg Abel set to succeed as CEO. The legendary investor’s over 70-year stewardship is coming to an end.

Similarly, Walmart CEO Doug McMillon also announced his retirement, ending his 12-year tenure in February 2026. Intel appointed Patrick Gelsinger as the new CEO, marking a year of transformative change— the company’s stock surged nearly 80% throughout the year, and the U.S. government became one of its minority shareholders, purchasing $8.9 billion worth of stock at an average price of $20.47 per share.

Market Outlook: Rationality Amidst Turbulence

Although early 2025 market expectations were generally optimistic, two major mid-year adjustments served as wake-up calls for investors. Policy volatility, questions about the sustainability of AI investments, extreme crypto market fluctuations, and rising geopolitical risks all added uncertainty to the 2026 market trajectory.

By year-end, the U.S. unemployment rate rose to 4.6%, the highest since November 2021, signaling that the labor market— often described as “low hiring, low layoffs”— had entered its weakest phase since the pandemic. This development leaves room for the Federal Reserve’s future policy adjustments.

Looking ahead, the rationalization of AI investments, long-term opportunities in crypto assets, and gradually clarifying policy expectations will be the three key areas of investor focus.