US stocks open in the red on the last trading day of the year: Nasdaq down 0.2%

• Markets recovered strongly from April's near-bear market when the S&P 500 fell 19% from its February peak following Trump's tariff announcements
• AI stocks drove divergent performance with Alphabet surging 65% while Amazon lagged, as the traditional 'Santa Claus rally' failed to materialize
• Initial jobless claims dropped to 199,000, the lowest in weeks, signaling continued labor market stability despite cooling hiring momentum

US stocks opened lower on the final trading day of 2025, with all three major indices down approximately 0.2%. Despite the weak finish, markets are closing out a strong year with the S&P 500 up 17%, the Nasdaq Composite gaining 21%, and the Dow Jones Industrial Average rising 13%.

The year's performance marks a remarkable recovery from April's turmoil when markets plummeted following President Trump's tariff announcement. The S&P 500 had fallen nearly 19% from its February peak, briefly dipping below 5,000 and approaching bear market territory before staging a robust recovery.

Artificial intelligence continued as the dominant market theme for the third consecutive year. The "Magnificent Seven" tech stocks showed divergent performance in 2025, with Alphabet leading gains at over 65% year-to-date as investors bet on its competitive advantage against OpenAI. Amazon notably lagged among the megacaps.

The absence of the traditional "Santa Claus rally" during the typically strong final five trading days has made some investors cautious. This seasonal pattern historically provides a late-year boost spanning into the first two sessions of the new year.

Labor market data released Wednesday showed economic resilience, with initial jobless claims dropping to 199,000 for the week ending December 27, down from 215,000 the prior week and marking the lowest level in several weeks. The four-week moving average rose slightly to 218,750, while continuing claims held steady at approximately 1.86 million.

The sustained low jobless claims indicate employers remain reluctant to cut payrolls despite cooling hiring momentum, providing a supportive backdrop for equities even as investors evaluate stretched valuations and shifting market leadership.