Wall Street drifting lower before the opening bell, heading for the fourth day of losses, on the final day of trading for 2025, a banner year for markets that was driven by both optimism and uncertainty.
Futures for the S&P 500 and the Dow Jones Industrial Average each ticked down 0.1% early Wednesday. Nasdaq futures were off 0.2%.
Institutional investors are largely closed out of their positions for the year, so trading is expected to be extremely light. U.S. markets will be closed on Thursday for New Year’s Day.
The S&P 500 is up more than 17% this year as investors embraced artificial intelligence technology, both in the sector and its potential across almost all other sectors.
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 a wide-ranging U.S.-led trade war threatens to add more fuel to inflation in the U.S. While the Federal Reserve has cut its benchmark lending rate three times to close out the year, inflation remains solidly above the central bank’s 2% target.
Fed officials have cited concerns over a weakening labor market as their motivation for cutting rates. Arriving later Wednesday is the Labor Department’s most recent data on weekly jobless claim applications, which are viewed as a proxy for layoffs.