Market Recap - Week of December 29, 2025 through January 2, 2026

The S&P 500 index shed 1% this week as the market benchmark transitioned to 2026 following its third consecutive year of double-digit percentage gains.

The S&P 500 ended at 6,858.47 on Friday, up 0.2% in its first trading session of the new year but down from last week's close.

The index locked in a 16% gain for 2025 on Wednesday. Trading was closed on Thursday for New Year's Day.

The index edged down 0.05% in December but still added 2.3% in Q4, marking its third consecutive quarter of gains.

The consumer discretionary sector had the largest percentage loss this week, falling 3.2%, followed by a 1.5% drop in technology and a 1.3% decline in financials. Consumer staples, communication services, real estate, health care, and materials also edged lower.

Tesla (TSLA) was among the week's hardest-hit stocks in the consumer discretionary sector, falling 7.8%. The electric vehicle manufacturer's fourth-quarter vehicle deliveries fell more than expected (9%). In a note to clients, Wedbush Securities attributed the performance to a challenging demand environment following the end of the US electric vehicle tax credit and headwinds in Europe.

In the technology sector, AppLovin (APP) posted the largest weekly percentage decline, down 13%, followed by Palantir Technologies (PLTR), which fell 11%.

Last Week’s Economic Reports

Headline and core CPI fell to 2.7% and 2.6% y/y
Nonfarm payrolls grew by 64k in November
The US Unemployment rate ticked up to 4.6%

S&P 500 Sector and Stylebox Returns

NOTE: The "1 Week" data above actually reflects the part of the week in 2026, i.e., January 2. The "YTD" data includes all of 2025. All returns are inclusive of dividends.

How to read the stylebox: The horizontal axis represents investment style, which can be value, blend, or growth for stocks and mutual funds. The vertical axis represents market capitalization for stocks, categorized into large, medium, and small companies. The number in each box represents the percentage growth of the category that is the intersection of the column and the row. For example, large-cap value is in the top-left corner of the box, so the large-cap value category is up by 12.4% YTD (year-to-date).

Thought of the Week

Investors have had to contend with plenty of noise in 2025. Tariff uncertainty disrupted markets, the longest government shutdown in U.S. history delayed economic data, and the Fed resumed its easing cycle after an extended pause. Nevertheless, economic growth held up, and equity markets are hovering near all-time highs. Meanwhile, inflation remains elevated, so consumers will continue to face higher prices this holiday season.

As seen in PNC’s Christmas Price Index, which tracks the cost of each gift in the song “The Twelve Days of Christmas,” prices rose by 4.5% in 2025, down from 2024’s 5.4% gain. Thankfully, these goods are all produced domestically, meaning no tariff-related impacts were felt. Inflation was primarily driven by service-related gifts, which climbed 5.4% y/y, compared to a 2.8% rise for goods-related gifts. However, the steepest price hikes actually came from two goods. After two years of stable prices, the cost of five gold rings rose 32.5% y/y as heightened concerns over geopolitical risks and rising deficits pushed gold prices higher. The cost of a partridge in a pear tree rose 13.5%, entirely due to higher pear tree prices from increased labor and land costs. For those interested in new hobbies, all four of the entertainment gifts experienced price increases, led by 8.1% y/y and 3.5% y/y gains in the costs of ten lords-a-leaping and nine ladies dancing. Luckily, bird lovers can rejoice this year as the costs of two turtle doves, three French hens, four calling birds, and seven swans-a-swimming all stayed flat.

With growth and inflation expected to rise in early2026 before moderating the remainder of the year, bargain hunters may want to start planning next year’s gifts already!

Source: JP Morgan (edited)

Up Next

Next week's US economic data will include December automotive sales and the Institute for Supply Management's December manufacturing index on Monday. The Institute for Supply Management will also release its December services index on Wednesday. Finally, the government's closely followed December employment report will be released on Friday.

Thank you to all who attended this month's market Update webinar!

You can watch the replay here:

https://www.youtube.com/watch?v=1w1MmNOLS48

The episode is also available wherever you listen to podcasts!