Markets notched a fourth straight day of gains as the S&P 500 closed at a record high, led by large-cap tech. Trading volume was light ahead of the holidays, and while a strong GDP print reinforced optimism about the economy, it did little to shift rate-cut expectations. Small caps and equal-weighted indexes underperformed, showing the rally remains concentrated. Gold hit another record high, while the dollar and short-dated bonds declined modestly.
Key Headlines & Market Movers:
GDP Surprises to the Upside, but Fed Cut Bets Unchanged: Q3 GDP was revised up to 4.3% annualized growth, marking the strongest pace in two years. That solidifies the narrative of a resilient U.S. economy heading into 2026. However, Fed rate-cut expectations remain muted, with markets pricing less than a 20% chance of a January move. Strong growth is keeping two-year yields elevated, suggesting that policymakers may feel less urgency to ease.
Santa Claus Rally Underway with Tech Leading the Charge: The Santa Claus Rally period officially begins this week, and the S&P 500 is already climbing into record territory. Gains remain narrowly driven: big tech outperformed, with Nvidia pacing the Dow. However, the equal-weighted S&P and small caps declined, reflecting limited breadth. Analysts point to resilient consumer demand and AI investment as key tailwinds for 2026.
Mixed Signals from Industrial Data and Business Spending: Despite strong headline GDP, underlying industrial and equipment investment data were mixed. Orders for business equipment dropped more than expected in October, while capital goods shipments exceeded forecasts, suggesting momentum heading into Q4. Industrial production was flat on average over the last two months, weighed down by weak manufacturing.
Corporate Moves Highlight Sector Divergence: Novo Nordisk surged after FDA approval of its oral Wegovy pill, boosting its defense against Eli Lilly. Meanwhile, Pfizer suffered a setback after a patient death tied to its hemophilia drug. Ford scaled back EV production but doubled down on battery storage, reflecting a shift in strategic priorities. In tech, ServiceNow made its largest acquisition ever, buying Armis for $7.75B.
S&P 500 Sector Performance
Looking Ahead
The market is closing the year on strong footing, but leadership remains concentrated in mega-cap tech, and the Fed remains in a holding pattern. As earnings season approaches and the calendar flips to 2026, attention will turn to breadth, consumer resilience, and policy clarity. If growth holds and inflation continues to ease, equities could grind higher, but stretched valuations and narrow leadership remain watchpoints.
The Investment Management Group at Duncan Williams Asset Management is led by a team with extensive experience in investment management, financial planning, and client service. President David Scully, CFA®, CFP®, has more than 20 years of experience and is active in Memphis civic organizations. Chief Investment Officer Kyle Gowen, CFA®, CFP®, oversees investment strategy and is engaged with the local community. Investment Analyst Jack Eason, CFA®, provides research and supports charitable initiatives. The IMG team is committed to professional standards, client service, and community involvement. No statement is intended as an offer of investment advice or a guarantee of future results.
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