Weekly Market Update – December 19, 2025

Quick Takes

• A late-week rally helped lift the S&P 500 to a slight weekly gain of +0.1%, leaving it just 1% away from its all-time high. The tech-heavy Nasdaq Composite led US equity indices with a +0.5% gain, while the small-cap Russell 2000 lagged with a -0.9% loss.
• Stocks started the week broadly lower, a continuation of the prior week’s tech-stock weakness, but indexes reversed higher at end of the week after an encouraging inflation report and strong earnings results from Micron Technology.
• US Treasuries generated positive returns, with yields generally decreasing across most maturities in the wake of the Federal Reserve’s interest rate cut in the prior week. As a result, the Bloomberg US Aggregate Bond index returned +0.3% for the week.

Source: Bloomberg. Data as of December 19, 2025.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Stocks seesaw on mixed data in the last full week of 2025

US stock indexes wrapped up the last full trading week of 2025 with mixed performance. The technology-heavy Nasdaq Composite index led US indices with a +0.5% gain, while the benchmark S&P 500 index was up a slight +0.1%. After leading the prior week, the small-cap Russell 2000 index was the laggard, falling 0.9%. Early in the week, stocks broadly declined as concerns over artificial intelligence (AI) spending and valuations weighed on technology stocks. This weakness carried over from the prior week, sparking volatility across major indexes. However, sentiment shifted later in the week thanks to upbeat earnings from semiconductor chipmaker Micron Technology as well as a cooler-than-expected consumer inflation report. AI-related stocks led the rebound, helping push the S&P 500 within 1% of its recent record high. The late week rally helped the S&P 500 avoid back-to-back weekly losses for the first time since June.

Markets digested numerous delayed data, including key jobs and inflation reports, which offered little clarity on the economy heading into 2026. November’s Employment Situation Report showed payroll growth rebounding by +64,000 after a steep -105,000 drop in October, largely due to federal buyouts. The Unemployment Rate ticked up to +4.6%, a four-year high, though underlying data suggested the labor market remains broadly stable. Retail Sales were flat in October, but the GDP-Linked Control Group rose a solid +0.8%. Inflation cooled, with headline Consumer Price Index (CPI) falling to +2.7% in November from +3% in September, though economists and Fed officials warned the data may be distorted by the recent government shutdown.

Overseas equities were also mixed with the developed markets MSCI EAFE index rising +0.2% but the MSCI Emerging Markets index dropped -1.6%, wiping out the prior week’s +1.4% gain. The MSCI Asia Pacific ex Japan Index was down -1.6% and the MSCI Japan index tumbled -2.6%. In emerging markets, the MSCI China index was down -1.5% following a -0.7% drop the prior week, and the MSCI Latin America index fell -2.3%. Oil prices hit their lowest level in nearly five years on Tuesday, with WTI crude briefly dipping below $55 before rebounding after President Trump ordered a blockade of sanctioned Venezuelan oil tankers. Meanwhile, China’s latest data showed weaker-than-expected retail sales, industrial output, and property investment. After three straight weeks of declines, the US Dollar Index inched up +0.2% last week, providing a slight headwind for non-US assets.

Bond markets saw notable action. US Treasuries posted gains as yields fell following last week’s Fed rate cut, while municipal bonds underperformed, and trading remained quiet. In contrast, global yields climbed after the Bank of Japan raised rates to 0.75%, its highest level in 30 years, pushing Japan’s 10-year yield above 2% for the first time since 1999. The 2-year and the 10-year US Treasury yields both fell -4 basis points to end at 3.48% and 4.15%, respectively. The 30-year US Treasury yield slipped -2 basis points to 4.82%. The Bloomberg U.S. Aggregate Bond Index returned +0.3% following the prior week’s -0.2% return. Non-US bonds, as measured by the Bloomberg Global Aggregate ex U.S. Bond Index, were down -0.3% though, following a +0.3% return the prior week.

Chart of the Week

Inflation Much Lower Than Expected, Delayed Data Shows

US Consumer Price Index (CPI), Year-over-Year % change (Jan. 2021–Nov. 2025)

Source: Bureau of Labor Statistics, CNBC.

The Week Ahead

With markets closed in observance of Christmas on December 25, and trading closing early on Wednesday (at 1 p.m. ET), there are only a handful of data releases this week. The delayed September release of the Chicago Fed National Activity Index starts things off on Monday. A delayed first look at how fast the US economy grew in the third quarter will be the highlight of the week with the Tuesday release of the advance-estimate of Gross Domestic Product (GDP). Data on Durable Goods and Industrial Production will also be released on Tuesday, as well as the Conference Board’s Consumer Confidence survey for December. Weekly jobless claims figures come on Wednesday, as well as weekly MBA mortgage applications (which typically fall on Thursday).

Did You Know?

TREE SALES DECLINE – Christmas tree sales declined to +3% in 2025, down from a +7% increase in 2024, according to a survey of regional sellers. If the sales are anything to go by, US consumers aren’t pulling the plug on holiday shopping this year—but they might be dimming the lights. (Sources: The Wall Street Journal)

NEW HIGH FOR SEMIS – The Philadelphia Semiconductor Index (commonly known as the SOX index) rallied +17.6% from 11/20 to 12/10, hitting a new all-time high in the process. All 30 stocks in the index posted gains during this period, but the worst-performing stock of the group was also the biggest: AI poster child Nvidia. (Source: Bespoke)

This Week in History

Economic Review

• The preliminary “flash” S&P Global U.S. Composite Purchasing Managers Index (PMI) showed economic activity slowed in December, falling to 53.0 from 54.1 the month before. That was under Wall Street expectations for 53.9 but still in expansion territory (results above 50 signals economic expansion). The Manufacturing PMI dipped to 51.8 from 52.2 the prior month, which was shy of expectations for 52.1 and is a 5-month low. Meanwhile the Services PMI fell to 52.9 from 54.1 the prior month. That was under expectations for 54.0 and marks a six-month low. Employment growth worsened in December, with a marginal rise in jobs which was the lowest since September and the second weakest recorded over the past eight months.  Jobs growth edged up to the highest for four months in manufacturing, but service sector employment came close to stalling, with firms in the sector reporting the smallest net gain to payrolls since April. Companies’ expectations about output in the year ahead remained positive on balance and above some of the lows seen this year but deteriorated slightly across both manufacturing and services. Inflationary pressures intensified markedly in December, although manufacturers saw a marginal slowing of input cost inflation, it accelerated in the service sector to the highest level in just over three years. The latest rises were most blamed on tariffs and rising labor costs.
• Job creation was better than expected for the delayed November report. Nonfarm payrolls increased by +64,000 for the month, well above expectations for +30,000 new payrolls. However, the October nonfarm payrolls decreased -105,000 and the September payrolls were revised lower to 108,000 from 119,000. The October decline came from a steep fall in government employment as deferred layoffs instituted earlier this year took effect. Government payrolls were down -162,000 for the month and fell an additional -6,000 in November. The November Unemployment Rate increased to +4.6% from 4.4% in September, largely driven by more people reentering the labor force and looking for work. Labor-Force Participation was up a tick to 62.5% versus 62.4% in September. Job additions continue to be led by health care, which added +46,000 jobs, more than 70% of the total net increase. Construction jobs rose by +28,000, while social assistance payrolls contributed +18,000. On the downside, transportation and warehousing was off -18,000, part of a continuing trend in job losses for the sector. Leisure and hospitality posted a loss of -12,000 jobs. Average hourly earnings increased +0.1% for the month, slower than expectations for a +0.3% increase, and the annual gain of +3.5% was the smallest annual gain since May 2021. The Fed would like to see wage growth slow to around +3% annually or less, a level it sees as consistent with low inflation. Average Weekly Hours Worked were up +0.1% in November versus +0.4% in October. November private sector payrolls increased by +69,000, and increased +52,000 in October, plus September was revised higher to 104,000 from the originally reported 97,000.
• In a release delayed by the government shutdown, the Commerce Department reported that US Retail Sales for October were flat. That was below Wall Street expectations for a +0.1% increase, which is where they were the previous month after being revised down from +0.2%. Retail sales represent about one-third of all consumer spending and offer clues on the strength of the economy. Retail Sales Ex-Autos rose +0.4% for the month, beating expectations for a +0.2% rise following a downwardly revised +0.1% increase the prior month (originally +0.3%). Sales Ex-Autos and Gas rose +0.5%, above expectations for a +0.4% rise and up from a flat reading the prior month (revised down from +0.1%). The Control Group, a figure used to calculate Gross Domestic Product (GDP), jumped +0.8%, twice the expected +0.4% increase and sharply higher than the unrevised -0.1% level the prior month. Sales growth was led by department stores, furniture stores, sporting goods and hobby stores, nonstore retailers, and miscellaneous store retailers. Building supply stores, drug stores, and restaurants posted declines for the month. The bottom line is that the report showed a solid increase across many discretionary categories.
• Homebuilder confidence inched up in December as the National Association of Home Builders (NAHB) Housing Market Index (HMI) rose +1 point for a second straight month to 39, matching expectations. A year ago, the index stood at 46. The index is based on a 0-to-100 scale, where any number over 50 indicates a good reading, and below 50 is considered negative sentiment. Sentiment has been in negative territory for 19 months in a row. The Current Sales component was up +1 points to 42, while Sales Expectations in the Next Six Months was up +1 points to 52, and Traffic of Prospective Buyers was unchanged at 26. For the month, 40% of builders reported cutting home prices, down from 41%. The average price reduction was down to 5% from 6% the previous month. The use of sales incentives beyond price cuts was up to 67 % from 65%, which is the highest percentage in the post-Covid period. On a regional basis, the Midwest and West rose +7 points and +2 points respectively, while the South fell by -2 points and the Northeast dropped -4 points.
• The final reading of the November University of Michigan Consumer Sentiment Index fell to 52.9 from the preliminary level of 53.3, where it was expected to remain. That is up from 51.0 the prior month. In the same period a year ago, the index stood at 74.0. The Current Economic Conditions component dropped to 50.4 from the preliminary 50.7 reading and from 51.1 the prior month. The Consumer Expectations component rose to 54.6 from 55.0 preliminary reading and 51.0 the prior month. One-year inflation expectations ticked up to 4.2% from the preliminary 4.1% level and 4.5% the prior month. The five-year inflation expectations was 3.2%, unchanged from the preliminary reading and down from 3.4% the prior month. The bottom line is that consumer sentiment remains under pressure as labor market worries continue to weigh on respondents.
• The National Association of Realtors (NAR) reported that Existing Home Sales increased +0.5% in November to a seasonally adjusted annual rate of 4.13 million units, slightly below expectations for 4.15 million units but up from the 4.11 million units reported the prior month (revised up from 4.10 million units) and the highest level since February. The three consecutive months of rising sales is the longest streak since December 2024. Year-over-year existing sales were down -1.0%, versus a +1.7% annual rate the prior month. The Median Existing Home Price increased +1.2% from the prior year to $409,200, marking the 29th consecutive month of year-over-year increases. The Inventory of Homes for Sale fell -5.9% from the prior month to 1.43 million units but is up +7.5% from a year ago. Unsold Inventory sits at a 4.2-month supply, down from 4.4 months the previous month and up from 3.8 months a year ago. This remains below the 6.0-month supply typically associated with a more balanced market. Homes Listed for Sale remained on the market for 34 days on average, up from 33 days the previous month and 29 days a year ago. First-Time Buyers were 30% of sales in the month, down from 32% the month before and matching the level a year ago. Historically, these buyers make up closer to 40% of home sales. All-Cash Sales slipped to 27% of transactions from 29% the prior month but is up from 25% a year ago. For the month, sales rose +4.1% in the Northeast and +1.1% in the South but were flat in the West and down -2.0% in the Midwest.
• The Philly Fed Manufacturing Business Outlook Survey fell to -10.2 in December from -1.7 in November. That was far short of Wall Street forecasts for a rise to +2.3. Readings above zero indicates economic expansion and below zero signal economic contraction. The indexes for New Orders, Shipments and Delivery Times all jumped by double digits back into positive territory at -8.6, -8.7, and -4.3, respectively. On the positive side, the Number of Employees index increased to 6.0 from +4.6 the prior month. The inflation gauges were mixed, with Prices Paid fell to +43.6 from +56.1 but the Prices Received rose to +24.3 from +17.7.
• The Kansas City Fed Manufacturing Survey fell to +1 in December from +8 in November, which was well above expectations to slip to +6. The Production index plunged to -3 from +18 while Shipments sank to 0 from +22, but New Orders inched up to 0 from -2. Employment was mixed with the Number of Employees falling to -4 from +11 while the Average Employee Workweek improved to +5 from +1. The Prices Paid index rose to +40 from +36 while the Prices Received index rose to +22 from +13. The Kansas City Fed Service Sector Outlook Survey improved to +3 from -7 (unrevised).
• The New York Fed’s Empire State Manufacturing Index, a gauge of manufacturing activity in the state, sank -22.6 points to -3.9 in December, much worse than Wall Street expectations for a drop to +10.0. After two strong months, demand fell meaningfully, with the New Orders indexes dropping -15.9 points to 0.0 and Shipments fell -22.5 points to -5.7. The Employment was mixed with Number of Employees up marginally, gaining +0.7 points to +7.3, but Average Employee Workweek falling -4.2 points to +3.5. The inflation gauges both improved, with Prices Paid and Prices Received falling -11.4 points and -4.2 points respectively. The outlook was the bright spot of the report, with the Six Months Ahead General Business Conditions index jumping +16.6 points to +35.7, the highest level since January.
• Weekly MBA Mortgage Applications fell -3.8% for the week ended December 12, after inching up +4.8% the prior week. The Purchase Index fell -2.8% after falling -2.4% the prior week. The Refinance Index dropped -3.6 after spiking +14.3% the prior week. The average 30-Year Mortgage Rate rose to 6.38% from 6.33% the prior week.
• Weekly Initial Jobless Claims fell -13,000 to 224,000 for the week ended December 12, better than expectations for 225,0000. The prior week was revised higher to 237,000 from 236,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose +67,000 to 1,897,000 for the week ended December 5, which was better than expectations for 1,920,000. The prior week’s reading was revised lower from 1,838,000 to 1,830,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.