Weekly Market Performance — December 19, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of December 15, 2025. U.S. stocks faced another week of choppy trading over the final full week of trading and major catalysts for the year. The S&P 500 snapped a four-day losing streak in response to upbeat technology earnings and positive economic data, jolting equites out of a risk-off mood. Elsewhere, central bank policy decisions were in focus for international markets as European exchanges broadly gained ground while Asia faced downward pressure. Outside of equities, fixed income markets also experienced a choppy week while the commodities complex edged lower.

Index Performance

U.S. and International Equities

U.S. Equities: Similar to last week, the final full week of trading in 2025 was characterized by two halves with stocks sliding through the first portion of the week before clawing back week-to-date losses on Thursday and Friday. Rotation dynamics remained in focus to start the week as stocks broadly appeared to re-enter waiting mode ahead of the week’s key catalysts, including by jobs and inflation data, and high-profile tech earnings. Tuesday’s release of the November employment report from the Bureau of Labor Statistics (BLS) pointed to a sluggish, but not cratering labor market, although the results did little to inspire investors to lift risk assets and near-term rate cut expectations. In the following session, a fresh wave of volatility sent the S&P 500 to its fourth straight loss on concerns around tech valuations and the sustainability of the artificial intelligence (AI) led rally in response to Blue Owl Capital (OWL) reportedly backing out of financing a Michigan data center with Oracle (ORCL).

Nonetheless, some of the ongoing pressure on AI sentiment was alleviated after Micron Technology (MU) offered an upbeat quarterly report Wednesday afternoon, sparking a bounce in tech shares Thursday. Major averages extended the advance the remainder of the week, cheering an unexpected two-handle for both headline and core consumer inflation last month as the coolest print in nearly five years provided an encouraging sign for the Federal Reserve’s (Fed) 2026 rate cutting path, while big tech names powered higher Friday amid the largest options expiry on record. Among other corporate developments, sportswear maker Nike (NKE) offered soft guidance, while FedEx (FDX) cited cost-related challenges in Thursday evening reports.

International Equities: European equities gained ground this week, shrugging off an unexpected drop to three-month lows for the December flash Purchasing Managers’ Index (PMI) early in the week. Stout U.K. outperformance was the big story after shares jumped in response to consumer inflation easing to an eight-month low just over 24 hours ahead of Thursday’s Bank of England (BOE) policy decision. London central bankers ultimately eked out another 0.25% rate cut in a narrow 5-4 vote, lifting stocks. Meanwhile, the European Central Bank also held its final policy meeting of the year, holding rates steady after core consumer inflation for the Eurozone last month matched estimates and the prior reading, while headline results cooled slightly.

Major exchanges across the Asia-Pacific region ended broadly lower, weighed down by cautious early week trading ahead of key U.S. jobs data and angst that AI related valuations in several countries are priced for more than companies can deliver. Tech-leaning markets faced the most downside pressure over the last five days with South Korea and Taiwan leading declines. Simultaneously, AI jitters and unfavorable technical indicators for major gauges of Hong Kong-listed tech companies collided with already dented sentiment following fresh evidence of the economy losing steam via an unexpected record low in retail sales while real estate investment contracted faster than expected. Japan, too, was pressured by tech concerns, although benchmarks pared gains to end the week after the Bank of Japan (BOJ) offered less hawkish-than-feared commentary after fulfilling expectations of a 0.25% rate hike (bringing borrowing costs to their highest level since 1995).

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index (Agg), were little changed over a choppy week as Treasuries aimed to cling to potentially their first weekly gain since November. Yields dropped after Thursday’s inflation surprise as expectations for Fed easing next year received a lift, before reversing the move amid upward pressure on yields as Japanese Government Bond yields (JGBs) rose toward 20-year highs. Nonetheless, most fixed income markets remain on track for a strong year, securing a 7%+ gain for the Agg. Mortgage-backed securities (MBS) are up more than 8.5% this year, outperforming investment-grade corporate bonds and high-yield bonds.

Importantly, as we noted in our 2025 Outlook, most of the returns came from income, as Treasury yields have largely remained rangebound — something we expect to continue in 2026. Despite predictions of declining U.S. exceptionalism and concerns about Treasuries losing their status as safe-haven assets, U.S. fixed income markets have outperformed most other developed markets — something we expect to continue in 2026 as well. Looking ahead, inflation expectations remain well anchored, which should allow the Fed to continue cutting rates into 2026. Absent excessive rate cuts (which markets would likely view as a policy error), Treasury yields should stay within a 3.75% to 4.25% range. Corporate credit markets remain expensive, though fundamentals are generally solid. Downgrade risks are growing, so spreads should widen marginally in 2026. After a slow start, municipal bonds have outperformed most other taxable markets in recent months. Attractive valuations and still solid fundamentals suggest solid returns could continue in 2026 (no guarantees, of course).

Commodities and Currencies: The broader commodities complex traded slightly lower on the week with crude oil prices dominating headlines. West Texas Intermediate (WTI) crude tumbled Monday and Tuesday on continued developments toward a resolution for the Russia-Ukraine war, before prices found a floor on fresh geopolitical risk. Prices steadied near $56/barrel after President Trump announced blockades of Venezuelan tankers, slowing the runoff of geopolitical risk and sparking jitters around a potential modest supply loss. In metals, gold added over a percent over the last five days to mark back-to-back weekly gains thanks to reinforced expectations that price pressures are easing, bolstering the case for additional Fed easing in 2026. Silver extended its year-to-date rally, while copper prices also gained ground. Meanwhile, the U.S. dollar strengthened against its peers. A slightly weaker euro was supportive, but the majority of support for the greenback stemmed from sharp weakness in the yen after the BOJ was more accommodative than expected, sending the yen toward potential intervention territory.

Economic Weekly Roundup

Inflation Report Shows Easing Despite Data Gaps. Headline consumer inflation increased 0.2% over the two-month period, while core inflation also rose 0.2% over the same period. Annual inflation for both headline and core decelerated to 2.7% and 2.6%, respectively. Since data does not exist for October, the latest BLS report highlighted the two-month change instead of the normal month-to-month analysis. Several categories experienced outright deflation. Prices for hotels, recreation, and apparel categories decreased from September to November. This is likely setting the stage for inflation easing in 2026, but things got complicated for some categories with no data. Energy services, such as electricity and utility-piped gas service, rose over 7% from a year ago as demand for electricity remains very high.

Investors cheered the latest inflation report as yields fell on the news. We may have some more hot readings as demand ticks higher from larger than expected tax returns in early 2026, but we should expect inflation to cool in the latter part of next year. Overall, we may get some bumpy inflation readings in the next few months, but our year-end forecast for inflation is 2.5%, giving the Fed opportunity to cut rates a few times next year.

The Week Ahead

The following economic data is slated for the week ahead, but some U.S. government data releases are slated for intermittent release before month-end due to the recent shutdown.  

• Monday: Chicago Fed National Activity Index (Nov)

• Tuesday: GDP, Personal Consumption, and GDP Price Indexes (third quarter second reading), Philadelphia Fed Non-Manufacturing Activity (Dec), Durable Goods Orders (Oct preliminary), Capital Goods Orders and Shipments (Oct preliminary), Industrial Production (Oct and Nov), Manufacturing (SIC) Production (Oct and Nov), Capacity Utilization (Oct and Nov), Richmond Fed Business Conditions (Dec), Conference Board Consumer Confidence report (Dec), Building Permits (Sep final)

• Wednesday: MBA Mortgage Applications (Dec 19), Initial Jobless Claims (Dec 20), Continuing Claims (Dec 13)

• Thursday: Christmas Day holiday, no economic releases scheduled

• Friday: No economic releases scheduled

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor's holdings.

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