Equities Hit New Record for First Time Since October: Dec. 24, 2025

The S&P 500 reached a fresh record for the first time in nearly two months as a buoyant economic outlook paired with favorable seasonals boosted sentiment on Wall Street. Equities are appreciating in broad-based fashion across all 11 major sectors against the backdrop of risk-on attitudes featuring little demand for downside hedges. But US stocks aren’t the only asset class marking new peaks, as mounting geopolitical tensions in Caracas, Kyiv and Moscow drove the safe-haven gold and silver metals to all-time highs as well earlier this morning. Additionally, expectations of two rate cuts next year amidst a tolerance of above-target inflation is also motivating purchases of those commodities, as the debasement trade pushes some investors into hard, less cyclical materials with limited supplies that hedge the potential for currency weakness. Elsewhere, the greenback, Treasuries and volatility protection instruments are relatively flat, bitcoin is down and forecast contracts are seeing investor interest. Meanwhile, today’s shortened Christmas Eve session is characterized by subdued trading volumes and a quiet economic calendar, as expected, although unemployment claims signaled a continued rebound in labor conditions, which together with yesterday’s ADP numbers, are quelling consumer slowdown fears.

Unemployment Claims Signal Improving Labor Conditions

This morning’s unemployment claims data provided further evidence that the labor market is improving, just one day after yesterday’s encouraging ADP figures. The four-week moving averages for both initial and continuing filings dipped to 216.75k and 1.894 million from 217.5k and 1.899 million. The declining longer-term trend occurred as the latter segment posted an increase to 1.923 million from 1.885 million during the week ended Dec. 13. First-time applications plunged to 214k for the week culminating on Dec. 20, below the 223k median estimate and the 224k from the prior week.

‘26 To Feature the Strongest Growth Since ‘21

Next year is set to feature the strongest rate of economic growth since 2021 of 3.4%, driven by a broad combination of tailwinds. Consumer spending is poised to continue to be bolstered by muted unemployment, positive real wage expansions and strong capital markets. Additional monetary policy accommodation alongside fiscal stimulus and lighter taxation are also supportive for shoppers as well as for corporate earnings. Amplified profitability, capex depreciation incentives, milder regulations and subdued energy costs could propel continued investments in factories and AI hubs along with favorable trade effects via net exports. Payrolls are likely to be a soft spot, however, as restrictive immigration and increased automation weigh on total headcount additions, but enhanced productivity resulting from greater efficiencies is geared up to offset the traditional detriments of occasional job losses in certain months of 2026. Risks to the outlook include a potential downturn in equities motivated by AI failing to live up to expectations, which would dampen the wealth effect across the economy and weaken household expenditures, raising slowdown concerns. Another possible threat lies in labor conditions, as rising layoffs could upend the cycle, although there’s enough ammunition at the Fed to quickly address employment stress through heavy benchmark reductions and/or a fresh round of quantitative easing.

International Roundup

South Korea Consumer Confidence Slips from Eight-Month High

South Korea’s December Consumer Confidence Index slipped slightly but nevertheless recorded its eighth consecutive month in positive territory. The Bank of Korea reported this morning that retail price pressures and currency volatility caused the gauge to subside 2.5 points from November’s eight-month high of 112.4. The 100 level indicates neutral sentiment. On a positive note, the country’s strong semiconductor industry has contributed to export resiliency despite the US having added import taxes.

Japanese Wholesale Services Inflation is Steady

Prices that Japanese businesses pay for services climbed 2.7% year over year in October, according to the Corporate Services Price Index. The result was unchanged from November, and it matched the economist consensus estimate. The month over month pace, however, eased from 0.6% to 0.4%. Among broad categories, advertising climbed 1.4% driven by a 7.3% hike for television and radio marketing. Real estate services climbed 0.6% while the transportation and postal category and the leasing and rental group both climbed 0.4%. Finance and insurance, other services and information and communications, furthermore, ascended 0.3%, 0.2% and 0.1%, respectively.