Market Update

• Wrapping up 2025  
• Futures moving higher after solid jobs data
• Still looking for a Santa Claus rally
• Equities tranquil while metals head bang
• Check out some of the recent ICE Data/Content:
• Inside The ICE House
  • Episode 506: Texas House's Will Herrmann and Alex Kuehler on Showcasing the Texas Business Advantage
  • ICE Mortgage Monitor: Seasonal and Calendar Factors Drive Rise in November Delinquencies
  • ETF Central: Rich Habits Podcast Co-Hosts Robert Croak and Austin Hankwitz
  • Market Story Lines

MAC Desk Commentary:

Good morning and Happy New Year’s Eve! Or, Welcome to 2026 to our friends in Australia, New Zealand and all the other regions that have already flipped the calendar. Like the Times Square ball drop, equities have been slowly falling this week. That trend looked to be continuing earlier this morning as futures once again ticked lower, but they are now in the green at the day’s high following solid jobless claims. We’re gonna need a bit more holiday cheer for a Santa Claus rally to make an appearance, but we still have a few days. It’s not like there’s been massive selling pressure though. The calmness of the markets during the final few days of the year is noteworthy. As Neil Sethi posted, over the past three days only two stocks in the S&P 500 have been up more than 3% in a day, with none yesterday, the first time in at least six months. Only six stocks have been down more than 3%.     
 


Based on yesterday’s close the S&P 500 is up 17% in 2025, which seemed laughable back in April. That’s also on the back of 20%+ gains the prior two years, and four of the past six. The equal-weight gained 10%, the Dow 14% and the Russell 2000 rose 12%.
 

 
Comm Services was easily the best performing sector this year (Alphabet and entertainment/media names), followed by Tech (something about AI?) and Industrials (Defense/aerospace, construction machinery, electrical). On the other end of things, Real Estate, Staples, Discretionary and Energy lagged, gaining less than 10%.
 


Yesterday the S&P traded in another very tight range of ~20 points, treading water until a bit of weakness into the close. The Russell 2000 was hit the hardest, down 0.8%. Every sector except for Energy and Comm Services was +/- 0.3%. Energy was again an outperformer (and the best sector this week) despite the commodity trading lower. Comm Services was also a leader on the back of Meta’s relative strength after it announced it was acquiring AI agent developer Manus. If you had to name a laggard it was Consumer Discretionary, with gaming, travel and retailers down modestly. The FOMC minutes in the middle of the day didn’t elicit much of a reaction in either equity or treasury markets. As was expected the release highlighted the lack of firm consensus on the decision to cut rats and the path forward. Generally, participants see lower upside risk to inflation- though it remains present- while the labor market continues to soften. Balance sheet discussions were also a major talking point. The Fed is pushing the idea that reserve management purchases are strictly for market plumbing purposes and are not QE/stimulative, and they are prepping the market for a potential big step down in those purchases after the April tax/payments flows.

Commodity volatility continued to be the main storyline as silver jumped 10% after selling off on Monday. However, the CME raised margin requirements again overnight and that’s reversing most of yesterday’s gain. Crude is up modestly this morning. Ag is mostly lower. China has reportedly bought around 8M tons of US soybeans this year, in accordance with US-China trade deal. Crypto is trading modestly higher with both Bitcoin and Ethereum playing around with their 20d ma.
 


Weekly claims are the main macro data today and they came in well below estimates and declined from last week, falling just below 200k. While the Christmas holiday likely had an impact (Thanksgiving week was 192K), the 199k print is also near the 50yr low. Continuing Claims also showed a solid decline. Yields rose about 2bp on the data and the US Dollar Index jumped as well.

• US 2yr +2bps to 3.47%, 5yr +2bps to 3.70%, 10yr +3bps to 4.15%, 30yr +2bps to 4.83%
• USD index: +$0.06 to $98.02 

Several major European markets are either closed until January 2 (Germany, Italy among them) or have a short trading day today (UK, France among others). Japan was also closed. Chinese equities were flat-to-lower overnight (Shanghai +0.1%, Hang Seng -0.8%). Official PMIs were above expectations and manufacturing squeaked back into expansion (barely) for the first time since March. Nvidia has asked TSMC to ramp up H200 chip production due to strong Chinese demand, according to reports and ByteDance is looking to buy CNY100B ($14B) of Nvidia chips next year, if it’s allowed.



Economic Data:
US:

• Initial claims: 199k vs 220k cons., prior 215k
  • Continuing claims: 1866k vs. prior 1923k
• 10:30 EIA crude inventories  

Global:

• China official Manufacturing PMI: 50.1 vs 49.2 cons., prior 49.2
• China official Non-manufacturing PMI: 50.2 vs 49.8 cons., prior 49.5
• China RatingDog Manufacturing PMI: 50.1 vs 49.8 cons., prior 49.9