In the last two weeks, markets showed their strength as the S&P 500 hit a record close, and the economy followed suit, with Q3 GDP growth beating estimates. Key economic indicators such as inflation and gas prices also helped shape the broader economic picture. Let’s dive in!
- Market Highs: U.S. stock markets continued their Santa Claus rally with the S&P 500 hitting a record closing high on Christmas Eve. The Santa Claus rally refers to a period of historically stronger market performance in the final trading days of December and the start of January.
- Q3 GDP Growth: The U.S. economy grew 4.3% in Q3, surpassing the expected 3.2%, driven by strong consumer spending and increases in exports and government spending. Though the report was delayed, markets showed little reaction as the data is backward-looking.
- Inflation Report: Inflation rose 2.7% year-over-year in November, down from 3% in September, indicating a slowdown partly due to incomplete data from the recent government shutdown.
- Falling Gas Prices: Lower gas prices, now below $3 a gallon nationally, ease inflationary pressures and may boost consumers’ disposable income. This relief supports broader economic growth and investment opportunities amid high holiday travel demand and ongoing cost-of-living concerns.
- Trump Accounts Debut: Trump accounts will begin in mid-2026, allowing parents and others to make after-tax contributions up to $5,000 annually. Children born 2025–2028 qualify for government seed funding of $1,000, with $250 contributions from philanthropists like the Dells and Dalios for eligible participants.
- Gold and Silver Surge: Gold and silver prices reached record highs, rising nearly 70% and 128% respectively since the start of the year, driven by safe-haven demand amid global fiscal deficits and economic uncertainty. Gold miners’ shares also gained in response.
- Nasdaq Extended Trading: Nasdaq plans to apply for regulatory approval to expand U.S. stock trading to 24 hours daily, five days a week, starting in late 2026. The proposal aims to increase market access but raises concerns about liquidity, volatility, and operational challenges.
- Congress Stock Ban: A GOP-led effort to force a House vote on banning stock trading in Congress faces likely failure as Democrats push to include the president and vice president in the ban, fracturing bipartisan support. Differences between Republican and Democratic proposals have slowed momentum and made agreement harder to reach.
- Inflation and Wages: Since 2020, overall prices have increased about 25%, more than double the previous five years’ inflation. While wages have generally kept pace, gains are uneven, favoring higher-skilled workers and certain industries, contributing to weak consumer confidence.
Over the next two weeks, investors will closely watch holiday retail data and energy prices for signals on consumer sentiment. Attention will also turn to the upcoming CPI inflation report, which could influence interest rate expectations. We hope you had a great holiday season!
Footnotes
SFM Market Commentary: 1/2/26
In the last two weeks, markets showed their strength as the S&P 500 hit a record close, and the economy followed suit, with Q3 GDP growth beating estimates. Key economic indicators such as inflation and gas prices also helped shape the broader economic picture. Let’s dive in!
Over the next two weeks, investors will closely watch holiday retail data and energy prices for signals on consumer sentiment. Attention will also turn to the upcoming CPI inflation report, which could influence interest rate expectations. We hope you had a great holiday season!
Footnotes