Hope you are all doing well. Stock markets began the month of December on a positive note, with the S&P 500 moving modestly higher for the week. The major U.S. stock indexes posted fractional weekly gains, pushing the S&P 500 and Dow within a percentage point of record highs set in late October and mid-November, respectively. The NASDAQ finished less than 2% below its historic peak, though still up 22% on the year. Today is Pearl Harbor Day. I have broken down this week’s update using quotes from legendary Pearl Harbor survivor and cook turned machine gun operator, Doris Miller.
“With those bullets spattering all around me, it was by the grace of God that I never got a scratch.” – Dorris Miller
The job market is cooling but the economy has remained unscathed. Payroll processor ADP said private employers shed 32,000 jobs in November, in contrast with the 47,000 positions added the previous month. The government’s November jobs release is set for December 16, more than two weeks behind schedule. Overall, the labor market has seen slower demand for labor but also lower supply of labor. Employers have been easing their hiring activity. Job openings are moving lower according to the ADP data but that does not mean the labor market is on the precipice of a rapid deterioration. Trends like the aging U.S. demographic, stagnant labor force participation, and ongoing immigration reform keep the supply of workers low. I expect that even with less jobs we aren’t going to see skyrocketing unemployment or a softening economy.
“When the dark clouds pass over, I’ll be back on the sunny side.” – Dorris Miller
Inflation has been a dark cloud hanging over the economy since 2022. This year the inflation picture has brightened. The Federal Reserve’s preferred gauge for tracking inflation cooled slightly. This is important to markets because we have a Fed meeting next week and this data potentially increased the chances that the Fed cuts interest rates. Friday’s report on the Personal Consumption Expenditures Index found that core inflation rose at a 2.8% annual rate in September. While that’s still above the Fed’s long-term 2.0% target, it’s below August’s 2.9% reading.
“It wasn’t hard. I just pulled the trigger and she worked fine. I had watched the others with these guns.” – Dorris Miller
It hasn’t been hard to make money in the stock market this year. You just need the resolve to not panic in the face of uncertainty. Despite the recent run of volatility for mega-cap technology stocks, tech-oriented sectors continued to lead the broader market entering the final weeks of 2025. As of Friday’s close, communication services (companies that include Google and Netflix) was the top performer across all 11 sectors with a 36% gain, while information technology (companies that include Nvidia and Microsoft) was second with a 26% return. With the broader market starting to perform better, the S&P 500 companies had an average earnings gain of 13.4% in the current quarter, I still think tech will continue to lead.
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