Daily market snapshot

The markets were closed on 12/25/2025.

• Stocks finish mostly higher – U.S. markets traded higher on Wednesday, with the S&P 500 gaining 0.3%, while the TSX finished near the flatline.* December appears to have lived up to its reputation as a favourable month for equity markets, with the S&P 500 tracking for a 1.2% gain and closing in on a third consecutive year of returns over 15%, while the TSX is higher by nearly 2% and on pace for an annual gain of over 30% including dividends.* Overseas, markets in Asia were mostly higher overnight, while European markets were little changed.* On the economic front, U.S. initial jobless claims ticked lower last week, falling to 214,000, below expectations of 231,000.* Bond yields finished modestly lower, with the 10-year U.S. Treasury yield falling to 4.13% and the 10-year GoC yield closing at 3.4%.*
• A rewarding year for diversified investors – 2025 has been a strong year for diversified investors, with global equity and bond markets posting positive returns. Canadian equities led the way, with the S&P/TSX Composite up over 32% including dividends through yesterday’s close—the best annual gain since 2009.* Overseas markets also delivered, with the MSCI AC World ex US Index up more than 25% in Canadian dollar terms, the strongest gain since 2006.* South of the border, the S&P 500 has recorded 39 new all-time highs and is on pace for a third straight year of gains above 15%.* In fixed income, credit-sensitive assets such as international high-yield bonds rose over 7%.* Canadian investment-grade bonds have posted positive returns as well, on track for gains above 2%.* Strong performance across regions and asset classes underscores the importance of maintaining a well-diversified portfolio aligned with your goals, in our view.
• Low consumer confidence has historically preceded strong equity returns – Yesterday’s U.S. consumer confidence reading fell to 89.1—the lowest since the peak of trade-policy uncertainty in April and well below the 30-year average of just under 100.* While it may seem counterintuitive, historically, low confidence has often preceded strong equity returns. Over the past 30 years, there have been 32 months when consumer confidence ranged between 80 and 90**. On average, the S&P 500 returned 13% including dividends in the following 12 months.** While history offers no guarantees, based on our outlook for steady economic and profit growth, we expect 2026 to be another favourable year for equities, and we recommend a global approach to overweighting stocks versus bonds. To view our full suite of portfolio guidance, check out our Monthly Portfolio Brief. 

Brock Weimer, CFA
Investment Strategy

^{Sources: *FactSet  **FactSet, Edward Jones}

• Markets close higher as GDP report shows strong growth – The TSX and U.S. equity markets finished higher on Tuesday, as the third-quarter GDP report showed the economy expanded at a faster-than-expected pace*. Growth-oriented communication and technology stocks led gains, while the consumer staples sector lagged*. Canada GDP contracted 0.3% in October, impacted by a 1.5% decline in the manufacturing sector**. Bond yields edged lower, with the 10-year Government of Canada yield at 3.42% and the 10-year U.S. Treasury yield at 4.17%*. Internationally, Asian markets closed higher after China's central bank kept its key policy rate unchanged at 3.0%, as expected*. The U.S. dollar declined against major currencies*. In commodities, WTI oil traded higher, as markets weighed the potential U.S. sale of Venezuelan crude from seized tankers amid renewed Ukrainian attacks on Russian energy infrastructure*, which could disrupt supply.
   
• GDP report shows faster-than-expected growth – The third-quarter U.S. GDP report revealed that growth accelerated to a 4.3% annualized pace on an inflation-adjusted basis, beating estimates of 3.0% and marking the strongest reading in two years*. Robust consumer spending across both goods and services — up 3.5% in the quarter*** — was the primary driver, demonstrating the resilience of consumers. Additional support came from higher net exports and government spending, while domestic investment dipped less than in the prior quarter***. We believe these readings suggest the U.S. economy was on solid footing heading into the government shutdown in October. However, we believe growth likely slowed in the fourth quarter because of shutdown-related disruptions and the expiration of electric vehicle (EV) tax credits. We expect Fed rate cuts and larger income-tax refunds in early 2026 to help support the economy and stabilize the cooling labour market.
   
• Consumer confidence dips further – The Conference Board's Consumer Confidence Index for the U.S. declined for the fifth consecutive month to 89.1, below forecasts pointing to 91.5*. Consumers' assessment of current business and labour-market conditions dropped 9.5 points, while the short-term outlook held steady****. Concerns over the economy were driven by prices and inflation, tariffs and trade, and politics, based on written responses****. While these trends could start to weigh on consumer spending, we believe continued positive real wage gains and further progress in bringing inflation down could help improve sentiment. 

Brian Therien, CFA;
Investment Strategy

^{Sources: *FactSet **Statistics Canada ***U.S. Bureau of Economic Analysis ****The Conference Board} 

• Holiday-shortened week kicks off with gains – The TSX hit another record high and U.S. stocks started the holiday‑shortened week in positive territory, led by small-caps and value-style investments, as optimism for a year‑end rally continues to build*. Trading volumes are expected to be lighter than usual this week, with markets closing early on Christmas Eve and fully closed on Christmas Day. Sentiment around AI and technology appeared to be improving this morning, supported by Micron’s strong earnings beat last week and a weekend report pointing to improving margins in OpenAI’s paid products*. That combination helped lift broader tech early in the day, but the cyclical sectors (financials, energy, materials) ended up outperforming at the end*. In commodities, oil prices rose, with WTI up roughly 2.5% to around $58 amid rising geopolitical tension following the U.S. decision to enhance its blockade on Venezuela*. Precious metals also saw a strong rally. Both gold and silver hit fresh record highs and remain on track for their best annual performance since 1979*.
   
• Tech regains its footing, but broadening could gain momentum in 2026 - Since early November, investors have begun rotating away from the dominant large‑cap technology names that have led the market since the bull run began in 2022*. But over the past week, sentiment toward the sector has improved, with the S&P 500 tech sector recouping its December losses*. We believe AI will remain a powerful long‑term tailwind, but periodic concerns around the pace of AI‑related spending, return on investment, and rising debt issuance are likely to resurface from time to time. Looking ahead to 2026, we expect the market to broaden—both within tech and across other sectors and regions—supported by solid earnings contributions. This backdrop continues to favour a balanced, diversified portfolio approach, in our view.
   
• Portfolio actions to consider for the year ahead - Heading into the new year, we see a backdrop of slightly looser Fed policy, modest fiscal stimulus tied to the new tax bill, fading tariff uncertainty, and steady economic growth. We expect another year of positive returns, but with valuations elevated, earnings growth will likely have to do the heavy lifting. Here are four actions we recommend investors consider heading into the new year:
  1. Maintain exposure to innovation and AI, but spread risk.
  2. Broaden your opportunity set to include cyclicals and overseas equities.
  3. Use bonds for still-attractive income and portfolio stability.
  4. Review excess cash allocations as bond yield advantage holds.

Angelo Kourkafas, CFA;
Investment Strategy

^{Sources: *Bloomberg} 

• Markets close higher ahead of holiday season – Stock markets in the U.S. and Canada were higher on Friday, following through on Thursday's modest gains*. The technology-heavy Nasdaq outperformed the S&P 500 and the Canadian TSX*. From a bond market perspective, U.S. and Canadian government bond yields were modestly higher across the curve*. The 10-year U.S. Treasury yield is now around 4.15% and has hovered in the 4.0% - 4.5% for much of the year*. From a historical perspective, U.S. 10-year yields are close to the highest levels in over 15 years, making the bond markets attractive still for investors seeking income*. Overall, for the full year, both U.S. and Canadian stocks are higher: the S&P 500 is up about 16%, while the Canadian TSX is up about 28%*.
   
• Can the bull market continue in 2026? – As we head into 2026, and year four of the bull market, investors are asking – can the gains continue, and will AI and tech continue to outperform? In our view, investors can experience positive market returns in the U.S. and Canada, but earnings growth will have to do the heavy lifting from here. What are some key themes for the year ahead? First, we think earnings growth broadens. For example, all 11 S&P 500 sectors are expected to see positive earnings growth in 2026, and many global equity markets may see double-digit earnings growth as well*. Second, we believe valuations are stretched in some areas. The scope for multiple expansion is limited given elevated starting valuations, especially in tech and growth sectors, but some parts of the market could see a bit of valuation catch-up. And third, we believe AI remains powerful but uneven.  Solid but slowing growth rates, higher debt levels, and aggressive capex buildout could create clearer winners and losers in the AI arms race. Overall, diversification remains critical for investors. Re-balancing portfolios and avoiding concentration risks are crucial in the year ahead. We favor U.S. mid-caps, emerging market and small and mid-cap international equities, and select cyclical sectors, to complement tech and AI investments.
   
• International markets may continue to see momentum – 2025 was a strong year for international equities, with markets in Germany, France, the United Kingdom and Japan all reaching new all-time highs*. We anticipate that 2026 will be another favorable year for global economies and markets, underscoring the importance of international diversification. While the robust performance of 2025 may be challenging to replicate, we believe there are compelling reasons to remain optimistic about international stocks in 2026. In our view, the combination of economic momentum in the eurozone, improving profitability among Japanese corporations, potential for accelerating earnings growth, and relatively attractive valuations — particularly among small-and mid-cap companies — supports the case for another year of positive returns in 2026. Additionally, with the S&P 500 heavily concentrated in the 10 largest companies, adding exposure to international developed markets can help manage risk, broaden opportunity sets and enhance long-term portfolio resilience. 

Mona Mahajan;
Investment Strategy

^{Sources: *FactSet}