Monday Market Review: December 29, 2025

Weekly Summary

Economic data included U.S. GDP for Q3 coming in stronger than expected, while industrial production was flattish, and durable goods and consumer sentiment weakened.

In a seasonally-light trading period, global stocks saw decent gains. Bonds ticked up slightly as yields fell. Commodities rose, led by precious and industrial metals.

 What to know about the markets:

U.S. stocks gained a bit during a lighter holiday trading week, with the S&P 500 and Dow reaching more record highs, and large cap stocks outperforming small caps. Every sector ended positively, led by a mixed bag of materials (with strength in metals for the year, boosting mining names), technology, and financials, although communications was not far behind, all with returns approaching or over 2% for the week. Lagging was the more defensive group of consumer staples, which was up just a few basis points. Real estate also gained about 1.5% for the week.

Foreign stocks saw gains as well last week, helped by a drop in the value of the U.S. dollar. Results in the U.K. and emerging markets outgained Europe and Japan. Some of the positive European sentiment appeared due to calls for further interest rate cuts in the U.K., as well as the German central bank forecasting some recovery in 2026, after a long stretch of lackluster, flattish GDP growth. In emerging markets, gains in South Korea and Taiwan (along with strong AI sentiment), were followed by South Africa and Mexico.

Bonds gained slightly as U.S. Treasury yields fell by a few basis points across the curve, with investment-grade and high yield credit outperforming government bonds, as did floating rate bank loans. Foreign bonds ended higher, especially in local terms, as the dollar fell back during the week.

Commodities earned positive returns last week, led by precious metals (platinum and palladium mostly), followed by industrial metals and energy. Crude oil ended up a fraction of a percent to $57/barrel, but remained down over -20% year-to-date as global production remains high. As the U.S. has pursued additional Venezuelan tankers, prices for gold and crude oil had ticked higher early in the week. The former has tended to be reactive to any potential conflict, while the latter is sensitive to Venezuela’s relative size in global oil markets. Natural gas prices remained volatile, due to changing weather forecasts, being up over 5% for the week, but down -15% for the trailing month.h.

 Our Weekly Economic Notes:

Notes key: (+) positive/encouraging development, (0) neutral/inconclusive/no net effect, (-) negative/discouraging development.

(+) The initial release of U.S. GDP for the 3rd quarter showed growth of 4.3%, well above expectations of 3.8%, as well as the 3.8% from Q2. As with other reports, GDP was significantly delayed, replacing the advance estimate from Oct. 30 and second estimate from Nov. 26, which were not released. Within the report, personal consumption rose 3.5% (accounting for 2.4% of the 4.3% total), mostly in services and non-durable goods, surpassing the 2.6% rise the prior quarter. Private investment declined -0.3% in the quarter (minimal impact on GDP on net), with sharp gains in equipment and intellectual property (over 5%) pulled down by drops of -5% in residential and -6% in non-residential structures. Government consumption rose 2% (adding 0.4% to the bottom line), mostly on the side of defense. Net exports added another 1.6% to the total growth figure, as export growth exceeded import growth. The GDP price index rose 3.8% on a quarter-to-quarter annualized pace. The Q3 PCE core price index, ex-food and energy, rose by an annualized 2.9%, exceeding the prior quarter by a few tenths.

Per the Atlanta Fed’s GDPNow indicator, the initial estimate for Q4 GDP growth has come in at 3.0%. While we’re near the end of Q4 already, the government data delays have just started to catch up. As with Q3, personal consumption is expected to lead (at 1.8% of the 3.0%), followed by gains in inventories (1%) and government spending (0.2%), and a correction backward in net exports. This all surpasses the Blue Chip economist consensus, which expects Q4 growth of 0.5-1.0%, but in a very wide range of views from -0.25% on the low side to 1.75% or so on the high side, near trend.

(-) Durable goods orders declined -2.2% in October, just beyond the -1.5% decline expected. Removing the lumpy series of aircraft orders, which declined sharply (-32% for defense, and -20% for non-defense), goods ex-transportation rose 0.2%. Core capital goods orders rose 0.5%, which was a few tenths stronger than expected. Core capital goods shipments rose 0.7%, roughly double the pace expected, but half the pace of the prior month. That category was led by gains in computers/electronics and industrial machinery, not quite offsetting the transportation impact. Total durable goods orders were up 4.8% over the past year, and 3.6%, with transportation excluded, which points to decent ‘real’ growth, and most categories solidly positive.

(0) In a combined multi-month catch-up report, industrial production showed a -0.1% decline for October but a 0.2% rise in November. Manufacturing production fell by -0.4% in Oct., and was unchanged in Nov. Mining production fell by -0.8% in Oct., but rose by 1.7% in Nov. Utilities production rose by 2.6% in Oct. but fell by -0.4% in Nov., with month-to-month variations usually being weather-related. Capacity utilization fell a tenth in Oct., but rose a tenth again in Nov., ending back where it was in Sept. at 76.0%. Over the full year, total industrial production was up 2.5%, just behind the rate of inflation. Leaders for the year were business equipment (11%) and utilities (5%), while motor vehicles/parts production fell by -6% and consumer goods production rose less than a percent.

(-) The Conference Board index of consumer confidence fell by -3.8 points in December to 89.1, representing the fifth consecutive monthly decline, although the November figure was revised upward slightly as the government shutdown came to an end. Assessments of present conditions fell by nearly -10 points, while expectations for the future (based on the short-term outlook for income, business, and labor market conditions) were unchanged. The labor market differential, measuring the difference between jobs seen as ‘plentiful’ versus ‘hard to get, also fell back by -2 points—and to the lowest level since Feb. 2021. That employment expectations segment was described as “gloomier,” and “the outlook for household incomes was less positive.” Inflation expectations for the coming year fell a tenth to 5.7%, obviously remaining quite elevated, and detached from reality, which implies consumers see price impacts from tariffs and residual pandemic inflation as still a significant burden (as opposed to the higher price level alone). While consumer confidence remains in the doldrums, it hasn’t necessarily translated into slower spending, as is often feared. However, the continued concern is that rising worries over labor market deterioration and/or layoffs could tip the balance into weaker consumer activity, particularly at the lower-income end of the spectrum.

(0) Initial jobless claims for the Dec. 20 ending week fell by -10k to 214k, below the expected no change at 224k. Continuing claims for the Dec. 13 week rose by 38k to 1.923 mil., above the 1.900 mil. expected. The recent more volatile showings for continuing claims (but not so much for initial claims) could be related to seasonal adjustments this time of year, particularly around Thanksgiving.

Have a good week and Happy New Year. We wish you and your families the best in 2026 and appreciate your partnership.

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Sources: Ryan M. Long, CFA; Director of Investments; FocusPoint Solutions, Inc.

FocusPoint Solutions, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Citigroup, Deutsche Bank, FactSet, Financial Times, First Trust, Goldman Sachs, Invesco, JPMorgan Asset Management, Marketfield Asset Management, Morgan Stanley, MSCI, Morningstar, Northern Trust, PIMCO, Standard & Poor’s, StockCharts.com, The Conference Board, Thomson Reuters, T. Rowe Price, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wall Street Journal, The Washington Post. Index performance is shown as total return, which includes dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product. FocusPoint Solutions, Inc. is a registered investment advisor.