State of Market: Close 12/29/25
Stocks edge lower into the close as precious metals retreat; bonds firm and oil advances
Thin holiday liquidity and year-end positioning weighed on equities. Gold and silver slumped sharply, while long-duration Treasurys gained and energy outperformed on firmer crude.
TendieTensor.com State of Market Close
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Overview
U.S. equities slipped modestly in the final hour of Monday’s holiday-shortened stretch, with major index ETFs finishing off last week’s levels amid subdued volumes and year-end positioning. The S&P 500 proxy (SPY) closed at 687.84, down from a previous close of 690.31 (-0.36%). The Nasdaq-100 tracker (QQQ) ended at 620.88 versus 623.89 (-0.48%), the Dow proxy (DIA) settled at 484.56 versus 487.03 (-0.51%), and small caps via IWM finished at 249.87 against 251.42 (-0.62%).
While equities eased, long-duration Treasurys firmed and commodities diverged: gold and silver posted notable drawdowns, while crude oil and U.S. natural gas advanced. The cross-asset pattern is characteristic of late-December rebalancing, thin liquidity, and tax-related flows that can amplify price moves into year-end. Seasonal narratives around the “Santa Claus rally” remain in focus, though Monday’s action tilted defensive in metals and supportive for duration.
Macro backdrop: yields, inflation, and expectations
The latest available Treasury curve levels show the 2-year at 3.44%, 5-year at 3.71%, 10-year at 4.17%, and 30-year at 4.84% (as of 2025-12-22). Against that backdrop, long-duration ETFs outperformed today (details below), consistent with a modest bid for duration.
On inflation, November CPI printed at 325.031 (headline) with core CPI at 331.068 (data provided for 2025-11-01). Importantly, inflation expectations remain anchored: the model-based 1-year stands at 3.20%, 5-year at 2.42%, and 10-year at 2.34% (2025-12-01). The combination of stable medium- to long-term expectations and a 10-year yield near 4.17% helps explain today’s constructive tone in Treasurys. Still, some market commentary warns that the macro path could turn more uneven—a MarketWatch piece flagged the possibility of a stagflationary period before reacceleration, underscoring why investors are sensitive to incoming growth and inflation data.
Equities: broad indices and leadership
- SPY: 687.84 vs 690.31 prior (-0.36%)
- QQQ: 620.88 vs 623.89 prior (-0.48%)
- DIA: 484.56 vs 487.03 prior (-0.51%)
- IWM: 249.87 vs 251.42 prior (-0.62%)
Large caps, growth, and small caps all finished lower, with small caps leading the decline. The day’s tone reflects a modest risk-off bias and some profit-taking after a strong stretch into late December. Several year-end narratives remain operative. MarketWatch highlighted that the seasonal “Santa Claus rally” has been on track this year and historically extends through the first two sessions of the new year, though today’s softness serves as a reminder that seasonality is a tailwind, not a guarantee. Another MarketWatch piece flagged that after two straight misses, this year’s Santa period had started well—placing more scrutiny on whether momentum can resume as 2026 begins.
Sector ETFs showed defensive dispersion. Energy eked out a gain, while Technology, Financials, and Health Care were slightly lower:
- XLE: 42.87 vs 42.78 prior (+0.21%)
- XLK: 145.91 vs 146.53 prior (-0.42%)
- XLF: 55.34 vs 55.62 prior (-0.50%)
- XLV: 155.82 vs 156.05 prior (-0.15%)
Energy’s resilience aligned with firmer crude prices (see Commodities). Tech’s modest dip fits with a late-year cooling in the AI trade that several commentators have warned could become more discerning in 2026. MarketWatch cautioned about new “warning flags” in hot AI exposures next year and suggested a shift from broad AI enthusiasm to a focus on execution and monetization. Related coverage spotlights how key AI bellwethers could shape early 2026: Wall Street is watching Nvidia’s next catalysts and AMD’s upcoming accelerators and rack-scale offerings, while analyses of Microsoft and Alphabet emphasize the need to convert AI leadership into sustained stock performance and cash returns. Those themes will likely influence leadership trends as the calendar turns.
Bonds: duration bid into year-end
Treasury ETFs advanced across the curve:
- TLT: 88.045 vs 87.74 prior (+0.35%)
- IEF: 96.585 vs 96.44 prior (+0.15%)
- SHY: 82.835 vs 82.79 prior (+0.05%)
The gains are consistent with a firm tone in duration given the latest 10-year yield at 4.17% and anchored inflation expectations. With volatility indicators remaining subdued into year-end—MarketWatch noted the VIX tracking toward low levels—bond markets appear comfortable with the current inflation/growth glide path heading into early 2026. That said, if incoming macro data were to challenge the soft-landing narrative, duration could be sensitive to repricing.
Commodities: metals sell off as energy firms
- GLD: 398.576 vs 416.74 prior (-4.36%)
- SLV: 66.045 vs 71.12 prior (-7.14%)
- USO: 69.61 vs 68.48 prior (+1.65%)
- UNG: 13.055 vs 12.81 prior (+1.91%)
- DBC: 22.485 vs 22.70 prior (-0.95%)
Gold and silver led the commodity declines. MarketWatch reported that silver’s powerful 2025 rally has met short-term headwinds, citing thin holiday trading, higher margin costs, and cautious positioning—conditions that can magnify downside in late December. Another strategist called the recent pre-holiday surge in precious metals “unhinged,” warning of near-term vulnerability. Complementing those views, separate MarketWatch coverage outlined how the New Year’s tax deadline can create a seller’s market for appreciated assets late in December—historically a headwind for metals and even the Dow—helping contextualize today’s retracement.
Energy prices diverged from metals. Crude oil (USO) rose, and U.S. natural gas (UNG) gained as well. Broader commodity basket DBC declined, reflecting the outsized weakness in metals versus strength in energy. Geopolitical headlines remain a background variable for energy; Bloomberg reported Ukrainian drones struck Russia’s largest gas processing plant last week, a reminder that supply risks can surface quickly. While we do not have intraday commodity futures detail here, the ETF tape reflected that support for energy complex on the day.
FX and crypto
The euro-dollar pair was largely unchanged on the session. EURUSD marked 1.17675 versus an open of 1.17672, with an intraday range of 1.17493 to 1.18279. The tight net change aligns with the broader “holiday mode” across macro markets.
Digital assets were weaker. Bitcoin (BTCUSD) marked 87,070.88 against an open of 90,049.91 (-3.31%), trading between 86,666.35 and 90,276.75. Ether (ETHUSD) printed 2,926.40 versus an open of 3,036.96 (-3.64%), with a 2,906.43–3,043.95 range. MarketWatch noted that despite regulatory and market structure wins in 2025, crypto prices underperformed, and investors are looking for a friendlier policy environment in 2026. Today’s declines reinforce that sentiment remains fragile into year-end.
Selected company and thematic headlines
- AI and semis: Several analyses focus on 2026 catalysts. MarketWatch highlighted what Nvidia investors can anticipate next year and where AMD could gain ground with accelerators and rack-scale systems. Additional pieces examined Microsoft’s positioning and Alphabet’s leadership in AI, with the message that cost control and monetization will matter more to equity performance in 2026. A deal note pointed to Groq executives joining Nvidia as part of a licensing agreement, another indicator of ongoing consolidation of talent and IP in the AI compute race. While we do not have real-time quotes for those names in this payload, the thematic focus helps explain why Tech remains a fulcrum for broader market leadership—even as XLK pulled back modestly today.
- Metals: Multiple commentaries flagged short-term risks for silver specifically, with some longer-term bulls still constructive but cautioning about near-term volatility and margin dynamics around year-end. Today’s SLV decline aligns with those warnings.
- Retail and discretionary: A MarketWatch report said Target received a lift following news of a significant investment from Toms Capital, a reminder that stock-specific catalysts can cut through a macro-quiet tape late in the year. Separately, Nike’s prolonged selloff drew insider buying interest from a board member, according to MarketWatch; insider accumulation can anchor sentiment, though we do not have today’s NKE tape in this dataset.
- Autos and industrials: CNBC highlighted GM’s standout 2025 stock performance relative to peers. In EVs, MarketWatch coverage suggested Tesla’s AI and robotaxi push remains a focal point, though another article noted fresh regulatory scrutiny over Model 3 doors—illustrating the mixed headline environment into 2026.
Positioning and sentiment
MarketWatch reported the VIX is set to finish the year near lows, signaling investor confidence heading into 2026 but also the potential for complacency. Evercore’s Emanuel flagged “warning flags” in the hot AI trade for 2026—consistent with the idea that leadership may become more selective and execution-driven. Meanwhile, another MarketWatch piece argued that stocks could extend their multi-year gains into a fourth year, albeit typically with more subdued returns. The balance of those views supports a base-case of more tactical, data-dependent markets in early 2026.
What to watch next
- Holiday seasonality: MarketWatch emphasized the Santa Claus rally typically spans the final five sessions of the year and the first two of the new year. With Monday’s modest pullback, attention turns to whether flows re-accelerate into 2026’s opening sessions.
- Macro updates: CNBC’s week-ahead preview highlighted macroeconomic updates despite a quiet earnings calendar. With inflation expectations anchored and the curve stable, any surprise in growth or prices could move duration and beta.
- AI earnings and capex color: The next wave of AI-related disclosures—spend, supply, monetization—will likely drive relative performance within Tech, as suggested by multiple articles focusing on Nvidia, AMD, Microsoft, and Alphabet.
- Metals follow-through: Given today’s drawdowns and year-end tax dynamics, gold and silver price action bears monitoring into the turn of the year.
Risks
- Year-end liquidity and tax selling: As MarketWatch noted, late December can become a seller’s market for appreciated assets, adding downside skew for metals and potentially for equity indices like the Dow.
- Complacency: A depressed “fear gauge” can leave markets vulnerable to macro or earnings surprises.
- AI concentration risk: As flagged by Evercore and other commentators, a more discerning market could increase volatility in crowded AI trades if execution or monetization disappoints.
- Geopolitics and energy: Disruptions to energy infrastructure, highlighted by recent drone strike reports on a Russian gas facility, can feed through to commodity and inflation dynamics.
Bottom line
Monday’s session reflected a classic late-December mix: modest equity softness, a bid for duration, metals indigestion, and firmer energy. Index-level pullbacks were measured, sector moves were orderly, and FX was quiet. With inflation expectations steady and yields contained, the path of least resistance for cross-asset risk into early 2026 may hinge on the seasonal follow-through of the Santa window and the first macro data points of the new year. Execution and selectivity—especially across AI-linked equities—are likely to define leadership as liquidity normalizes.
Overview
U.S. equities slipped modestly in the final hour of Monday’s holiday-shortened stretch, with major index ETFs finishing off last week’s levels amid subdued volumes and year-end positioning. The S&P 500 proxy (SPY) closed at 687.84, down from a previous close of 690.31 (-0.36%). The Nasdaq-100 tracker (QQQ) ended at 620.88 versus 623.89 (-0.48%), the Dow proxy (DIA) settled at 484.56 versus 487.03 (-0.51%), and small caps via IWM finished at 249.87 against 251.42 (-0.62%).
While equities eased, long-duration Treasurys firmed and commodities diverged: gold and silver posted notable drawdowns, while crude oil and U.S. natural gas advanced. The cross-asset pattern is characteristic of late-December rebalancing, thin liquidity, and tax-related flows that can amplify price moves into year-end. Seasonal narratives around the “Santa Claus rally” remain in focus, though Monday’s action tilted defensive in metals and supportive for duration.
Macro backdrop: yields, inflation, and expectations
The latest available Treasury curve levels show the 2-year at 3.44%, 5-year at 3.71%, 10-year at 4.17%, and 30-year at 4.84% (as of 2025-12-22). Against that backdrop, long-duration ETFs outperformed today (details below), consistent with a modest bid for duration.
On inflation, November CPI printed at 325.031 (headline) with core CPI at 331.068 (data provided for 2025-11-01). Importantly, inflation expectations remain anchored: the model-based 1-year stands at 3.20%, 5-year at 2.42%, and 10-year at 2.34% (2025-12-01). The combination of stable medium- to long-term expectations and a 10-year yield near 4.17% helps explain today’s constructive tone in Treasurys. Still, some market commentary warns that the macro path could turn more uneven—a MarketWatch piece flagged the possibility of a stagflationary period before reacceleration, underscoring why investors are sensitive to incoming growth and inflation data.
Equities: broad indices and leadership
- SPY: 687.84 vs 690.31 prior (-0.36%)
- QQQ: 620.88 vs 623.89 prior (-0.48%)
- DIA: 484.56 vs 487.03 prior (-0.51%)
- IWM: 249.87 vs 251.42 prior (-0.62%)
Large caps, growth, and small caps all finished lower, with small caps leading the decline. The day’s tone reflects a modest risk-off bias and some profit-taking after a strong stretch into late December. Several year-end narratives remain operative. MarketWatch highlighted that the seasonal “Santa Claus rally” has been on track this year and historically extends through the first two sessions of the new year, though today’s softness serves as a reminder that seasonality is a tailwind, not a guarantee. Another MarketWatch piece flagged that after two straight misses, this year’s Santa period had started well—placing more scrutiny on whether momentum can resume as 2026 begins.
Sector ETFs showed defensive dispersion. Energy eked out a gain, while Technology, Financials, and Health Care were slightly lower:
- XLE: 42.87 vs 42.78 prior (+0.21%)
- XLK: 145.91 vs 146.53 prior (-0.42%)
- XLF: 55.34 vs 55.62 prior (-0.50%)
- XLV: 155.82 vs 156.05 prior (-0.15%)
Energy’s resilience aligned with firmer crude prices (see Commodities). Tech’s modest dip fits with a late-year cooling in the AI trade that several commentators have warned could become more discerning in 2026. MarketWatch cautioned about new “warning flags” in hot AI exposures next year and suggested a shift from broad AI enthusiasm to a focus on execution and monetization. Related coverage spotlights how key AI bellwethers could shape early 2026: Wall Street is watching Nvidia’s next catalysts and AMD’s upcoming accelerators and rack-scale offerings, while analyses of Microsoft and Alphabet emphasize the need to convert AI leadership into sustained stock performance and cash returns. Those themes will likely influence leadership trends as the calendar turns.
Bonds: duration bid into year-end
Treasury ETFs advanced across the curve:
- TLT: 88.045 vs 87.74 prior (+0.35%)
- IEF: 96.585 vs 96.44 prior (+0.15%)
- SHY: 82.835 vs 82.79 prior (+0.05%)
The gains are consistent with a firm tone in duration given the latest 10-year yield at 4.17% and anchored inflation expectations. With volatility indicators remaining subdued into year-end—MarketWatch noted the VIX tracking toward low levels—bond markets appear comfortable with the current inflation/growth glide path heading into early 2026. That said, if incoming macro data were to challenge the soft-landing narrative, duration could be sensitive to repricing.
Commodities: metals sell off as energy firms
- GLD: 398.576 vs 416.74 prior (-4.36%)
- SLV: 66.045 vs 71.12 prior (-7.14%)
- USO: 69.61 vs 68.48 prior (+1.65%)
- UNG: 13.055 vs 12.81 prior (+1.91%)
- DBC: 22.485 vs 22.70 prior (-0.95%)
Gold and silver led the commodity declines. MarketWatch reported that silver’s powerful 2025 rally has met short-term headwinds, citing thin holiday trading, higher margin costs, and cautious positioning—conditions that can magnify downside in late December. Another strategist called the recent pre-holiday surge in precious metals “unhinged,” warning of near-term vulnerability. Complementing those views, separate MarketWatch coverage outlined how the New Year’s tax deadline can create a seller’s market for appreciated assets late in December—historically a headwind for metals and even the Dow—helping contextualize today’s retracement.
Energy prices diverged from metals. Crude oil (USO) rose, and U.S. natural gas (UNG) gained as well. Broader commodity basket DBC declined, reflecting the outsized weakness in metals versus strength in energy. Geopolitical headlines remain a background variable for energy; Bloomberg reported Ukrainian drones struck Russia’s largest gas processing plant last week, a reminder that supply risks can surface quickly. While we do not have intraday commodity futures detail here, the ETF tape reflected that support for energy complex on the day.
FX and crypto
The euro-dollar pair was largely unchanged on the session. EURUSD marked 1.17675 versus an open of 1.17672, with an intraday range of 1.17493 to 1.18279. The tight net change aligns with the broader “holiday mode” across macro markets.
Digital assets were weaker. Bitcoin (BTCUSD) marked 87,070.88 against an open of 90,049.91 (-3.31%), trading between 86,666.35 and 90,276.75. Ether (ETHUSD) printed 2,926.40 versus an open of 3,036.96 (-3.64%), with a 2,906.43–3,043.95 range. MarketWatch noted that despite regulatory and market structure wins in 2025, crypto prices underperformed, and investors are looking for a friendlier policy environment in 2026. Today’s declines reinforce that sentiment remains fragile into year-end.
Selected company and thematic headlines
- AI and semis: Several analyses focus on 2026 catalysts. MarketWatch highlighted what Nvidia investors can anticipate next year and where AMD could gain ground with accelerators and rack-scale systems. Additional pieces examined Microsoft’s positioning and Alphabet’s leadership in AI, with the message that cost control and monetization will matter more to equity performance in 2026. A deal note pointed to Groq executives joining Nvidia as part of a licensing agreement, another indicator of ongoing consolidation of talent and IP in the AI compute race. While we do not have real-time quotes for those names in this payload, the thematic focus helps explain why Tech remains a fulcrum for broader market leadership—even as XLK pulled back modestly today.
- Metals: Multiple commentaries flagged short-term risks for silver specifically, with some longer-term bulls still constructive but cautioning about near-term volatility and margin dynamics around year-end. Today’s SLV decline aligns with those warnings.
- Retail and discretionary: A MarketWatch report said Target received a lift following news of a significant investment from Toms Capital, a reminder that stock-specific catalysts can cut through a macro-quiet tape late in the year. Separately, Nike’s prolonged selloff drew insider buying interest from a board member, according to MarketWatch; insider accumulation can anchor sentiment, though we do not have today’s NKE tape in this dataset.
- Autos and industrials: CNBC highlighted GM’s standout 2025 stock performance relative to peers. In EVs, MarketWatch coverage suggested Tesla’s AI and robotaxi push remains a focal point, though another article noted fresh regulatory scrutiny over Model 3 doors—illustrating the mixed headline environment into 2026.
Positioning and sentiment
MarketWatch reported the VIX is set to finish the year near lows, signaling investor confidence heading into 2026 but also the potential for complacency. Evercore’s Emanuel flagged “warning flags” in the hot AI trade for 2026—consistent with the idea that leadership may become more selective and execution-driven. Meanwhile, another MarketWatch piece argued that stocks could extend their multi-year gains into a fourth year, albeit typically with more subdued returns. The balance of those views supports a base-case of more tactical, data-dependent markets in early 2026.
What to watch next
- Holiday seasonality: MarketWatch emphasized the Santa Claus rally typically spans the final five sessions of the year and the first two of the new year. With Monday’s modest pullback, attention turns to whether flows re-accelerate into 2026’s opening sessions.
- Macro updates: CNBC’s week-ahead preview highlighted macroeconomic updates despite a quiet earnings calendar. With inflation expectations anchored and the curve stable, any surprise in growth or prices could move duration and beta.
- AI earnings and capex color: The next wave of AI-related disclosures—spend, supply, monetization—will likely drive relative performance within Tech, as suggested by multiple articles focusing on Nvidia, AMD, Microsoft, and Alphabet.
- Metals follow-through: Given today’s drawdowns and year-end tax dynamics, gold and silver price action bears monitoring into the turn of the year.
Risks
- Year-end liquidity and tax selling: As MarketWatch noted, late December can become a seller’s market for appreciated assets, adding downside skew for metals and potentially for equity indices like the Dow.
- Complacency: A depressed “fear gauge” can leave markets vulnerable to macro or earnings surprises.
- AI concentration risk: As flagged by Evercore and other commentators, a more discerning market could increase volatility in crowded AI trades if execution or monetization disappoints.
- Geopolitics and energy: Disruptions to energy infrastructure, highlighted by recent drone strike reports on a Russian gas facility, can feed through to commodity and inflation dynamics.
Bottom line
Monday’s session reflected a classic late-December mix: modest equity softness, a bid for duration, metals indigestion, and firmer energy. Index-level pullbacks were measured, sector moves were orderly, and FX was quiet. With inflation expectations steady and yields contained, the path of least resistance for cross-asset risk into early 2026 may hinge on the seasonal follow-through of the Santa window and the first macro data points of the new year. Execution and selectivity—especially across AI-linked equities—are likely to define leadership as liquidity normalizes.