Last Week
No Santa Claus Rally, but still no tears (and apparently no fear) for investors who enjoyed an unexpected third year in a row of double-digit returns in the market. The S&P 500 slipped 1.03%, finishing the year with a 16% gain, while the Nasdaq Composite retreated 1.5%, reducing its 2025 gain of more than 20%. Small Caps finished the year up over 12%, following a 1.03% weekly drop. The bond market remained stable, with the yield on the 10-year Treasury inching up 5 basis points to 4.19%. The 10-year yield traded within a 20-basis-point range between 4% and 4.20% for the entire last four months of the year. The combination of strong corporate earnings growth and continued steady, low interest rates is the foundation upon which the stock market has been able to command historically elevated valuation multiples. There is considerable optimism among forecasters that the dynamic will continue in 2026. We caution investors to be diligent in maintaining their equity allocations consistent with their risk tolerance.
There was little news in the business world as the year wrapped up, although the geopolitical landscape remained quite volatile, without disrupting the markets. Gold traded higher for the week and posted a 66% gain for the year, suggesting that traders have maintained confidence in the precious metals as an asset class and a hedge against global uncertainties. Cryptocurrencies, on the other hand, have fallen out of favor, with Bitcoin declining 25% from its August peak. The case for continued allocations to both the precious metals and cryptocurrencies is the potential of a decline in the dollar.
On the Chicago Sports Scene, it is playoff time for the Bears with the Packers coming to town next Saturday night. Most sports betting sites give the Bears a slim chance of winning the Super Bowl of less than 5%. Bear Down and prove the skeptics wrong!
This Week
Monday marks the end of the Santa Claus rally period, which so far has left a lump of coal in the stockings of investors.
The Energy sector will be in focus after the U.S. over the weekend captured Venezuela’s leader, Nicolás Maduro, and President Donald Trump said the U.S. will “run” the country for now. The State Street Energy Select SPDR ETF (XLE) and the Westwood Salient Enhance Midstream Income ETF (MDST) are two of our favorite Energy sector holdings.
The December jobs report, released on Friday, will be the most significant economic data release, as it will influence the monetary policy decision later this month
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.