Equity Leadership Broadens

December closed out a year shaped by moderating inflation, supportive monetary policy, and steady equity markets. As the month unfolded, leadership in the market widened beyond mega‑cap tech and AI‑focused names, hinting at a more balanced backdrop as we head into 2026.

Mixed Moves Across Major Indexes

U.S. stock indexes moved in different directions during the month. The S&P 500 finished close to flat after a strong annual performance, the Nasdaq 100 gave back some gains amid profit‑taking, and the Dow posted an advance as capital shifted toward defensive industrial companies.

Fed Messaging Stays Measured

The Federal Reserve delivered another 25‑basis‑point rate cut at its December meeting, bringing the target range to 3.50%–3.75%. Policymakers described economic growth as moderate and acknowledged slower job gains, suggesting a more balanced view between inflation pressures and labor‑market risks. Updated projections pointed to a gradual easing path, while meeting minutes showed a diverse set of views within the committee on how quickly to proceed.

Inflation Trends Continue to Cool

November’s inflation readings showed headline CPI at 2.7% year over year and core CPI at 2.6%. Price pressures in shelter, medical care, and household furnishings remained present, but monthly gains came in below expectations. While certain categories like gasoline rose, the overall data supported an ongoing disinflation trend.

Labor Market Momentum Slows

The unemployment rate moved up to 4.6% in November, prompting the Fed to emphasize a shift toward a more balanced labor market. Payroll growth slowed, with modest gains in healthcare and construction but declines across transportation, warehousing, and several consumer‑oriented sectors.

Services Stay Resilient, Manufacturing Softens

Service‑sector activity continued to expand, with the ISM Services PMI holding in growth territory. Business activity and new orders remained steady, though hiring indicators stayed subdued. Manufacturing, meanwhile, remained in contraction, reflecting weaker export demand and ongoing inventory adjustments.

Looking Ahead to 2026

As the new year begins, many strategists expect a soft‑landing environment supported by moderate growth, continued disinflation, and a gradual pace of rate cuts. For long‑term, diversified investors, the familiar themes remain essential: staying invested, balancing growth and income, and using periods of volatility as opportunities rather than disruptions.

For guidance tailored to your financial situation, we encourage you to reach out to our team for personalized support.