Weekly Market Commentary December 22nd to December 26th 2025

On a holiday-shortened week, the only meaningful economic data that was released was GDP for the third quarter.

The economy surged in the third quarter, driven by much stronger consumer spending and an upturn in exports. Real GDP rose 4.3%, largely exceeding expectations, which is the strongest in two years; five years if you exclude the pandemic rebound. This is on the heels of strong second quarter growth, helping to temper concerns over the potential impact of tariffs. Due to the historic government shutdown in October, economists are expecting potential weakness in GDP for the fourth quarter. However, they expect those effects to largely reverse for the first quarter of 2026 with the shutdown having ended.

Despite a light trading week, the equity markets enjoyed a nice rally with the S&P 500 reaching new all-time highs. The famous ‘Santa Claus rally’ that is often heard in the news this time of year, refers to a strong rally in equities to close out the year (final week of December often spilling into the first week of January). We are currently off to a good start, suggesting investors finally made it on the Nice list after not having such a rally since the end of 2021. The S&P 500 closed 1.4% higher to 6,930, the Nasdaq 1.2% higher to 23,593, and the Dow Jones Industrials 1.2% higher to 48,710. U.S. Treasury yields were mostly flat, with the 2-Year closing at 3.48% and the 10-Year closing at 4.13%.

Next week will be a similarly shortened week with very little economic data. Pending home sales, initial jobless claims, and the minutes from the FOMC meeting will be released. Have a Happy New Year!