Daily market snapshot

• Stocks finish little changed – U.S. equity markets closed near the flatline Tuesday, with the S&P 500 on track in on its third consecutive year with an annual gain over 15%.* From a leadership perspective, most sectors finished the day flat to slightly lower, with energy and communication services among the top performers.* Overseas, Asian markets were mixed overnight while European markets traded mostly higher.* Longer-term bond yields ticked higher with the 10-year U.S. Treasury yield climbing to 4.12% while the 2-year yield was little changed at 3.45%.* In commodity markets, precious metals added to strong year-to-date gains with silver gaining 8% and gold rising by 0.4%.  
   
• Bonds reclaim leadership over cash – After underperforming cash in three of the past four years, U.S. investment-grade bonds have gained roughly 7.5% in 2025, outperforming cash by over 3%—the widest margin since 2020.* Treasury yields have declined across most maturities, driven by 0.75% of Fed rate cuts and a cooling labor market, leading to strong performance in U.S. investment-grade bonds.* With yield a key driver of fixed-income returns, the yield advantage of investment-grade bonds over cash has also contributed to their outperformance. Currently, the yield on investment-grade bonds is approximately 0.7% higher than that of cash, placing it near the upper end of its three-year range.* We expect the Fed deliver another one or two rate cuts in 2026, which could put some downward pressure on short-term interest rates and diminish the return potential of cash. However, based on our expectation for steady economic growth and persistent budget deficit concerns, we see limited scope for a decline in long-term yields, with the 10-year Treasury yield likely trading between 4% - 4.5% in 2026. In our view, this could lead to a further widening of the yield advantage between U.S. investment-grade bonds and cash, potentially helping pave the way for another year of bond outperformance. For investors holding excess cash, consider reallocating to other asset classes—such as equities or other fixed-income investments—based on your risk tolerance, investment objectives and time horizon.
   
• Housing market showing signs of stabilization – The Federal Housing Finance Agency (FHFA) home price index rose 0.4% in October, signaling potential stabilization after declines in four of the prior six months.* Similarly, the S&P Case-Shiller 20-city index increased 0.3%, exceeding expectations of 0.1% and marking the largest monthly gain since January.* This follows yesterday’s positive pending home sales report, which reached the highest level since February 2023.* Mortgage rates, while still elevated compared to recent history, have eased from over 7% at the start of 2025 to roughly 6.5%, potentially bringing additional demand to the housing market.* Residential investment has weighed on economic growth, contracting in five of the past six quarters.* With mortgage rates off peak levels, an improvement in housing market activity and investment could provide an additional tailwind for economic growth in the year ahead.*
   

Brock Weimer, CFA;
Investment Strategy

^{Sources: *FactSet}

• Stocks close lower – U.S. equity markets closed modestly lower on Monday, following gains of over 1% in the S&P 500, NASDAQ, and Dow last week.* From a leadership perspective, defensive sectors such as utilities and consumer staples outperformed alongside energy, which benefited from higher oil prices, while growth-oriented sectors like technology and consumer discretionary lagged.* Overseas, Asian markets were mostly lower overnight, while European markets ended slightly higher with the Euro Stoxx 50 Index on track for its best year since 2003 in U.S. dollar terms.* On the economic front, the pending home sales index rose to 79.2 in November—the highest since February 2023—suggesting that the gradual decline in mortgage rates during 2025 may be spurring demand in the housing market.* In commodities, gold fell more than 4% Monday but remains on pace for a yearly gain of over 60%.* Bond yields edged lower, with the 10-year Treasury closing near 4.11%.*
   
• Dollar on pace for largest annual decline since 2017 – The ICE U.S. Dollar Index is down over 9% so far in 2025, on track for its largest annual drop since 2017.* Political and fiscal uncertainty in the U.S., along with a narrowing yield advantage versus other developed markets, contributed to the dollar’s decline.* For investors, a weaker dollar has provided meaningful support to international equity returns, particularly in developed markets. In local currency terms, the MSCI EAFE Index has gained roughly 21%, including dividends, through Friday’s close.* In U.S. dollar terms, the index is up about 32%.* Based on our outlook for additional Fed rate cuts in 2026, the U.S. yield advantage could narrow further relative to other developed markets, potentially putting downward pressure on the dollar and reinforcing the case for maintaining a globally diversified portfolio.*
   
• Tech investment helping drive economic growth – Last week’s GDP reading indicated that the economy remained on solid footing in the third quarter, with real GDP growing at a 4.3% annualized rate, exceeding economists’ expectations for a 3% gain.* Personal consumption expanded at a robust 3.5% clip, while exports surged 8.8%.* Additionally, nonresidential investment grew at a healthy 2.8% rate and has posted an average quarterly growth rate of 6.5% in 2025.* Strength in technology-related categories such as information processing equipment and software has provided a notable boost to nonresidential investment, and we expect strong technology spending to continue into 2026, helping support ongoing growth. 

Brock Weimer, CFA;
Investment Strategy

^{Sources: *FactSet}

• Stocks tread water – U.S. equity markets were little changed today amid thin trading volumes at the end of a holiday-shortened week*. The S&P 500 finished just below Wednesday's record high, with the Nasdaq index broadly unchanged and the Russell 2000 small-cap index a touch softer (-0.5%)*. This follows a good run in U.S. equity markets over recent trading sessions as investors eye a potential "Santa Claus" rally through the rest of the year*. International equity markets were similarly quiet, with Australia, Hong Kong and many European bourses closed for the holidays*. Shorter-dated U.S. government bonds rallied on Friday, with the yield on the 2-year Treasury note down 2 basis points (0.02%) over the day, but the longer-dated 10-year note flat at 4.13%*. Finally, gold and silver prices continue to rally, helped by signs of geopolitical strain and a weaker dollar, with gold on track for its best year since 1979*.
• Oil prices react to geopolitics – The U.S. launched military strikes in Nigeria against Islamic State targets yesterday, according to President Trump, who cited the persecution of the country's Christian population by the military group*. The news, along with recent tensions around Venezuelan oil supplies, had put WTI oil on track to deliver its largest weekly gain since late October*. However, building hopes around progress towards a Ukraine peace agreement, and a potential easing in Russian oil sanctions, saw prices fall on Friday to $57 per barrel*. At current levels, oil prices are providing some helpful relief for U.S. consumers who continue to struggle with inflation rates that have now run above the Fed's 2% target for almost five years*. Markets do not look particularly concerned around late-year geopolitical headlines, with the VIX index, a measure of expected volatility, trading near a 2025 low*.
• A rewarding year for diversified investors – 2025 has been a rewarding year for diversified investors, with global equity and bond markets delivering positive returns. International stocks led the way, with the MSCI AC World ex US Index up over 30% including dividends —the strongest annual gain since 2009**. Domestically, the S&P 500 posted strong results, recording 39 new all-time highs and is on pace for a third straight year of gains above 15%**. In fixed income, credit-sensitive assets such as U.S. high-yield bonds and emerging-market debt outperformed, are each up more than 8%.** U.S. investment-grade bonds also delivered solid returns, on track for gains above 7%**. Strong performance across regions and asset classes underscores the importance of maintaining a well-diversified portfolio aligned with your goals, in our view. We expect 2026 to be another favorable year for equities, and to read more check out our 2026 outlook. 

James McCann
Investment Strategy

^{Sources: *Bloomberg **FactSet}

The markets were closed on 12/25/2025.

• Stocks finish higher – U.S. equity markets traded higher on Wednesday, with the S&P 500 gaining 0.3% and the Nasdaq rising 0.2%.* December appears to have lived up to its reputation as a favorable month for equity markets, with the S&P 500 tracking for a 1.2% gain and closing in on a third consecutive year of returns over 15%.* Overseas, markets in Asia were mostly higher overnight, while European markets were little changed.* On the economic front, initial jobless claims ticked lower last week, falling to 214,000, below expectations of 231,000.* Bond yields finished modestly lower, with the 10-year Treasury yield falling to 4.13%.*
• A rewarding year for diversified investors – 2025 has been a rewarding year for diversified investors, with global equity and bond markets delivering positive returns. International stocks led the way, with the MSCI AC World ex US Index up over 30% including dividends through yesterday’s close—the strongest annual gain since 2009.* Domestically, the S&P 500 posted strong results, recording 39 new all-time highs and is on pace for a third straight year of gains above 15%.* In fixed income, credit-sensitive assets such as U.S. high-yield bonds and emerging-market debt outperformed, each up more than 8%.* U.S. investment-grade bonds also delivered solid returns, on track for gains above 7%.* Strong performance across regions and asset classes underscores the importance of maintaining a well-diversified portfolio aligned with your goals, in our view.
• Low consumer confidence has historically preceded strong equity returns – Yesterday’s consumer confidence reading fell to 89.1—the lowest since the peak of trade-policy uncertainty in April and well below the 30-year average of just under 100.* While it may seem counterintuitive, historically, low confidence has often preceded strong equity returns. Over the past 30 years, there have been 32 months when confidence ranged between 80 and 90**. On average, the S&P 500 returned 13% including dividends in the following 12 months.** While history offers no guarantees, based on our outlook for steady economic and profit growth, we expect 2026 to be another favorable year for equities, and we recommend a global approach to overweighting stocks versus bonds. To read more about our outlook for 2026 and view our full suite of portfolio guidance, check out our 2026 outlook. 

Brock Weimer, CFA
Investment Strategy

^{Sources: *FactSet **FactSet, Edward Jones}