U.S. stocks headed into the final stretch of 2025 clinging to record territory—an unusually calm setup for a week that’s famous for thin trading, year-end portfolio adjustments, and a seasonal pattern investors watch closely: the “Santa Claus rally.”
On Friday, December 26, Wall Street finished essentially flat after a multi-session climb, with the Dow Jones Industrial Average closing at 48,710.97, the S&P 500 at 6,929.94, and the Nasdaq Composite at 23,593.10. The moves were tiny—down fractions of a percent—but the bigger story was the calendar: the market is now inside the Santa Claus rally window and just about 1% away from the psychological 7,000 milestone on the S&P 500. [1]
With only a handful of trading sessions left in the year, investors have two big questions in view:
- Can stocks finish 2025 with another leg higher—potentially pushing the S&P 500 through 7,000?
- Will the Federal Reserve’s next signals reinforce (or challenge) expectations for rate cuts in 2026?
Here’s what’s driving the conversation—and what could move markets next.
Stock market today: quiet trading, strong weekly gains, and records still in sight
Friday’s lack of follow-through wasn’t a sign of panic. It looked more like a market pausing after a strong run—especially given the holiday timing and lighter participation.
Trading volume was muted: Reuters put volume at 10.22 billion shares on U.S. exchanges versus a 15.98 billion 20-day average—exactly the kind of thin liquidity that can make modest orders move prices more than usual. [2]
Despite Friday’s slight dip, the holiday-shortened week ended on a positive note:
- S&P 500: +1.4% for the week
- Dow: +1.2%
- Nasdaq: +1.2%
Those weekly gains were echoed across multiple market recaps and helped keep all three major indexes near record levels as 2025 winds down. [3]
And zooming out beyond the week, the year has been strong:
- S&P 500: +17.82% year to date
- Dow: +14.49%
- Nasdaq: +22.18%
- Russell 2000: +13.64% [4]
That “big picture” strength matters because it frames how investors interpret the next few sessions: is this simply the market coasting into year-end, or is there enough momentum—plus seasonal tailwinds—to push to new highs?
The Santa Claus rally: why this tiny slice of the calendar gets outsized attention
The Santa Claus rally isn’t a single day—it’s a specific window. In market lore (and common Wall Street shorthand), it refers to the last five trading days of the year plus the first two trading days of the new year. Reuters noted that this period began midweek and runs through January 5, keeping attention locked on late-December and early-January price action. [5]
A big reason the pattern is closely watched is what it’s thought to signal. As Carson Group chief market strategist Ryan Detrick put it, the market is still early in the “official” Santa Claus rally period, and he expects a continued upward tilt—while reminding investors that volatility is part of the price of long-term gains. [6]
Seasonality researchers also track how frequently the Santa Claus period has historically been positive. MarketWatch cited analysis defining the same window and pegging long-run frequency and average performance as favorable over decades of data, while noting recent years can deviate from the pattern. [7]
Two important caveats for investors (and readers):
- Seasonality is not destiny. A Santa Claus rally can fail—even in strong years.
- Liquidity is thin. Holiday trading can amplify moves in either direction, which is why “quiet” markets can still surprise.
Why “S&P 500 at 7,000” has become the year-end headline
Round-number milestones matter in markets because they compress a complex story into a simple, tradable narrative. The S&P 500 is not far from 7,000, and Reuters reported it was about 1% away after a record close earlier in the week. [8]
That milestone carries extra weight because it would land on the heels of a historically persistent run: Reuters noted the S&P 500 was on track for an eighth straight monthly gain, which would mark its longest monthly winning streak since 2017–2018. [9]
In Reuters’ week-ahead preview, Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management, summed up the bullish mood succinctly—arguing the “path of least resistance” still points higher absent a major shock. [10]
The keyword there is absent a major shock. Which brings us to the next catalyst: the Fed.
Fed minutes on deck: the next test for 2026 rate-cut expectations
Even in a week with limited economic data and lighter trading desks, one scheduled event stands out: the release of Federal Reserve meeting minutes.
The Federal Reserve’s official calendar lists FOMC Minutes for the December 9–10 meeting scheduled for release at 2:00 p.m. on December 30. [11]
Why markets care:
- The Fed cut the target range for the federal funds rate by 0.25 percentage point at that December meeting, setting the range at 3.50% to 3.75%, according to the Fed’s statement. [12]
- Reuters reported that the Fed lowered rates by 75 basis points across its last three meetings of 2025, and that the December decision was divided, with policymakers projecting widely different rate paths for 2026. [13]
That “divided” backdrop is exactly why the minutes can matter more than usual: investors will look for clues about what drove the disagreements, what risks officials emphasized, and what conditions might prompt further easing—or a pause.
Michael Reynolds, vice president of investment strategy at Glenmede, told Reuters that parsing how many cuts could arrive next year is a major market focus, and suggested the minutes could be illuminating on the debate inside the room. [14]
Adding to the uncertainty, Reuters also reported that Cleveland Fed President Beth Hammack signaled she saw no need to change rates for months and pointed to inflation concerns—an example of the internal push-pull investors will watch for in the minutes. [15]
Market rotation: investors hunt for opportunities beyond mega-cap tech
One of the most important under-the-surface stories heading into year-end is rotation—the idea that leadership is spreading beyond the biggest technology winners.
Reuters highlighted that while tech has been the core engine of the multi-year bull market, the S&P 500 technology sector had fallen more than 3% since the start of November, even after rebounding more recently. Meanwhile, areas including financials, transports, healthcare, and small caps showed stronger relative performance over that stretch. [16]
Anthony Saglimbene, chief market strategist at Ameriprise Financial, described the move as a shift toward areas with more moderate valuations and a broader buy-in to the idea that the economy has held up better than feared. [17]
This matters for two reasons:
- Breadth can stabilize rallies. When gains aren’t concentrated in a narrow group of stocks, the market can be less fragile.
- Valuations become part of the story. Rotation often reflects investors looking for “reasonable price” exposure as leadership becomes crowded or expensive.
Global markets: precious metals steal the spotlight as gold and silver hit records
While U.S. stocks were near all-time highs, the most eye-catching moves late in the week came from commodities—especially precious metals.
Reuters reported that silver broke above $77, hitting a record $77.40/oz, while gold reached a record $4,549.71/oz. The rally was tied to expectations for Fed rate cuts and geopolitical tensions that boosted safe-haven demand. [18]
Peter Grant, vice president and senior metals strategist at Zaner Metals, pointed to a mix of forces driving the move—including expectations for further easing in 2026 and a weaker dollar—while warning that thin markets can amplify volatility. [19]
Reuters also noted the dollar index was on track for a weekly decline, which typically supports dollar-priced commodities by making them cheaper for non-U.S. buyers. [20]
On the broader global markets tape, Reuters said public holidays kept many markets closed (including much of Europe), while open bourses leaned toward finishing the year in positive territory and Asian stocks pushed to multi-week highs earlier in the session. [21]
A separate market recap published on Nasdaq.com added that several Asia-Pacific markets rose, citing gains in Japan’s Nikkei and a modest uptick in China’s Shanghai Composite, while major European markets were closed for the holidays. [22]
Single-stock movers that shaped the post-holiday session
Even on a quiet day, a few company-specific stories can help explain where risk appetite is flowing.
Reuters highlighted two notable movers on Friday:
- Nvidia gained after news tied to an AI chip technology licensing deal with startup Groq and the hiring of Groq’s CEO. [23]
- Target rose after a report that activist investor Toms Capital Investment Management had built a significant investment in the retailer. [24]
Those headlines fit the broader late-2025 theme: AI remains central to market narratives, while shareholder activism continues to pressure consumer-facing companies to sharpen strategy and capital allocation.
What to watch next week: thin liquidity, year-end flows, and the first “real” catalyst of 2026
The last few sessions of a calendar year often come with a unique mix of forces:
- Portfolio rebalancing and tax-related positioning
- Holiday-thinned volume
- Momentum trading that can accelerate quickly
- Headline risk that can be exaggerated by light liquidity
Reuters’ week-ahead preview explicitly flagged year-end portfolio adjustments as a potential source of volatility when trading is light. [25]
That makes December 30—when the Fed minutes are scheduled—an unusually important date for what is otherwise a low-catalyst week. [26]
Meanwhile, the market is balancing two competing instincts:
- Optimism: stocks are near record highs, 2025 performance is strong, and the S&P 500 is within striking distance of 7,000. [27]
- Caution: the Fed debate is still active, some policymakers are signaling patience, and thin markets can turn a small surprise into a big move. [28]
The bottom line
As the Santa Claus rally window opens, the market’s mood is upbeat—but not complacent. The S&P 500 is flirting with 7,000, the Dow and Nasdaq are closing out a strong year, and investor focus is shifting from “How high did stocks climb in 2025?” to “What does the Fed do next—and how broad is this rally really?” [29]
If year-end trading stays calm, the headlines may center on milestones and seasonality. But if liquidity remains thin—and the Fed minutes spark a rethink on 2026 cuts—late December could still deliver the kind of volatility Wall Street warns about, even when indexes look steady on the surface. [30]
References
1. www.reuters.com, 2. www.reuters.com, 3. apnews.com, 4. apnews.com, 5. www.reuters.com, 6. www.reuters.com, 7. www.marketwatch.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.federalreserve.gov, 12. www.federalreserve.gov, 13. www.reuters.com, 14. www.reuters.com, 15. www.reuters.com, 16. www.reuters.com, 17. www.reuters.com, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.nasdaq.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.reuters.com, 26. www.federalreserve.gov, 27. www.reuters.com, 28. www.reuters.com, 29. www.reuters.com, 30. www.reuters.com
