EconomyYear in Review: The Broadening Bull—S&P +18% as Mag 7 Grip Loosens
The "Recession Godot" never arrived in 2025. Instead, the S&P 500 posted a +17.9% return, securing a rare "hat trick" of double-digit gains as the market broadened beyond the Magnificent 7. While the Mag 7 still performed, their contribution to total returns dropped to 42.5%—the lowest since 2021—as investors rotated into Communication Services (+33.7%) and Industrials (+19.4%). The year's true anomaly was Gold ([[GC=F]]), which surged 60% despite positive real rates, shattering historical correlations; conversely, Bitcoin ([[BTC-USD]]) decoupled from the risk-on rally to finish down 6.3%. Macro resilience was the driver, with Q3 GDP hitting 4.3% and allowing the Fed to cut 75bps into strength. We enter 2026 with Goldman Sachs forecasting another +12% upside, but with valuations elevated, the burden of proof shifts to corporate earnings growth.