Stocks open higher to start the year’s last full week; bonds firm, gold advances as investors balance rotation and rate-cut debate

Market tone at the opening bell is constructive as U.S. equities attempt to stabilize following last week’s rotation out of crowded AI leaders. The year’s final full trading week begins with broad index ETFs modestly higher: SPY is opening above Friday’s close, QQQ is firmer, and both DIA and IWM are positive. Treasurys are also bid with TLT, IEF and SHY all nudging up versus prior closes, pointing to slightly lower yields at the margin. In commodities, gold and silver extend gains, while oil and natural gas ease. Crypto is near unchanged, and the euro is a touch firmer against the dollar.

Macro backdrop: rates, inflation and expectations
- Treasury yields as of the latest published levels show a curve that remains upward sloping from 2s to 10s: 2-year at 3.52%, 5-year at 3.72%, 10-year at 4.14%, and 30-year at 4.79%. That configuration—alongside today’s early bid in duration via higher TLT and IEF prints—keeps financial conditions moderately supportive for risk assets while leaving room for debate on growth durability.
- Inflation readings in the latest dataset show headline CPI at 324.368 (index level) and core CPI at 330.542 as of September. While index levels don’t translate directly into today’s run rate, the more timely market-based inflation expectations are anchored: 5-year at 2.35% and 10-year at 2.27%, with the 5y5y forward implied near the low-2s. Anchored expectations are consistent with the bond market’s willingness to rally following the recent Fed cut, a dynamic highlighted in coverage that also cautions the move “could look reckless” come January if incoming growth or price data re-accelerate.
- The policy debate is not entirely settled inside the Fed either. Two dissenters publicly argued inflation remains too high and that the Committee could have waited for delayed jobs and inflation reports. That divergence helps explain why rate-sensitive asset moves—such as in long duration bonds and gold—are firm but measured rather than euphoric.

Equities: constructive open with rotation still the subtext
- Broad indices: At the cash open, SPY last traded at 685.46 versus a previous close of 681.76, up roughly 0.5%. QQQ is at 618.26 vs. 613.62 (+~0.8%), DIA at 487.25 vs. 485.40 (+~0.4%), and IWM at 255.47 vs. 253.85 (+~0.6%). The advance is broad-based and follows a week characterized by investors “dumping winners and buying almost everything else,” a pattern that coincided with records in the Dow and S&P 500 outside of the narrow AI cohort.
- Sector tone: Early prints in the sector proxies included in today’s feed are moderately positive. XLF is slightly higher (55.145 vs. 54.95 prior), XLK is firmer (144.465 vs. 143.69), the “XLE” entry in the payload is up modestly (43.08 vs. 42.83), and XLV is ticking up as well (154.495 vs. 154.06). Taken together, this indicates a supportive breadth backdrop rather than an AI-only bid.
- AI rotation remains a key narrative. Articles over the weekend framed risks that the AI boom could turn to bust next year, while also noting that some strategists still project double-digit S&P 500 gains into 2026 despite valuation headwinds. Within AI specifically, Oracle’s recent disappointment weighed on the theme and raised bubble questions, while Broadcom’s latest earnings reinforced strong AI momentum with shares noted as moving higher after results. Another piece flagged investor confusion around Broadcom’s disclosure on a new AI customer, underscoring how sentiment remains mercurial even within perceived winners. The mixed messaging is consistent with today’s index action: a firmer QQQ, but with leadership broadening and cyclicals and small caps participating.
- Company-specific headlines to monitor:
• Visa: A report on Friday highlighted Visa as leading Dow gainers, with a view that the Fed’s rate cut could be a tailwind and that fundamentals remain intact. That dovetails with today’s pro-cyclical tone in financials (XLF).
• Costco: Earnings coverage suggests better-than-expected results on sales and revenue, though another analysis called the picture “mixed” beneath the surface. Markets are likely to parse comps and traffic developments rather than extrapolate linearly into 2026.
• Lululemon: News of the CEO departure adds uncertainty to a story stock already facing execution questions after a tumultuous year.
• Sanofi: Shares were reported slumping after setbacks for an MS drug—an idiosyncratic negative within healthcare even as the sector ETF opens slightly firmer.
• Tilray and cannabis peers: Stocks surged late last week on reports of potential federal reclassification of marijuana. That momentum trade may continue to be headline-sensitive.
• iRobot: A Chapter 11 filing and move to go private caps a tough period for the consumer-robotics name and may have read-throughs for selected hardware niches.
• Media and streaming complex: Commentary around Paramount’s debt profile in a potential combination with Warner Bros. Discovery underscores deal-financing risks if rates don’t fall as fast as equity investors expect. Another piece argued that a Netflix or Paramount bid for Warner could be unfriendly to consumers—policy and antitrust considerations remain an overhang.

Bonds: duration bid, tracking anchored expectations
- Long duration (TLT 87.71 vs. 87.34 prior) and intermediates (IEF 96.41 vs. 96.19) are up at the open, with front-end SHY also fractionally higher (82.925 vs. 82.87). The move fits with the combination of anchored inflation expectations (market 5-year 2.35%, 10-year 2.27%) and a policy path that recently shifted incrementally more accommodative. The 10-year yield at 4.14% (latest published) and 30-year at 4.79% provide a still-positive term premium backdrop that supports financials’ net-interest margins even as cost of capital eases at the edges.
- One watch-out flagged in the weekend press: the bond rally could fade or reverse in January if growth data surprise to the upside or if fiscal supply and term premium concerns reassert. For multi-asset investors, that makes the duration bid tactical rather than unambiguously strategic.

Commodities: precious metals firm, energy slips
- Gold (GLD 397.769 vs. 395.44) and silver (SLV 57.825 vs. 56.10) are both advancing at the open. The combination of slightly lower yields and persistent policy debate within the Fed is a supportive backdrop for hedges.
- Oil (USO 68.48 vs. 68.81) is a touch lower, and natural gas (UNG 12.565 vs. 12.73) is down more materially at the open. A separate analysis suggested that even a regime change in Venezuela would not quickly lift oil supply due to infrastructure constraints, reinforcing a medium-term floor narrative that’s not in play today as prices ease modestly. Broad commodities proxy DBC is unchanged versus Friday in the feed.

FX and crypto: dollar edges lower vs. euro; crypto treads water
- EURUSD’s mark is 1.1751, modestly above its listed open in the feed, suggesting a slightly softer dollar into the U.S. open. That aligns with the risk-on tone in equities and bid in Treasurys.
- Bitcoin (BTCUSD mark ~89,383) and Ether (ETHUSD mark ~3,128.9) are little changed versus their listed opens, tracking press commentary that bitcoin didn’t materially respond to the Fed’s recent rate cut. Ranges this morning appear contained in the feed.

Notable movers and themes from the news flow
- AI and market leadership:
• A forecaster argued the AI boom could turn to bust in 2026, warning about valuation risk and concentration.
• Another strategist highlighted rotation as a sign of confidence in the broader economy, with investors reallocating from AI winners into laggards.
• Oracle’s stumble pressured AI-adjacent names, while Broadcom’s results were viewed as supportive of AI infrastructure momentum, albeit with some investor unease around customer disclosure.
- Consumer and retail: Costco met or beat headline expectations; separate coverage asked investors to look beyond the headline profit gains and assess sales dynamics. Beauty and fragrance demand remained resilient in recent consumer commentary.
- Healthcare: Sanofi’s MS drug setbacks weighed on the stock. Sector valuation pieces pointed to healthcare as one of the market’s relatively healthy and attractively priced corners even as stock-specific risks remain.
- Cannabis: Reports that the administration could pursue rescheduling spurred a sharp bid in cannabis equities late last week, with Tilray singled out as jumping. The theme remains policy-driven.
- Corporate finance and M&A: Paramount’s sizable debt load is central to any tie-up with Warner, with financing costs and terms a swing factor for equity holders.
- Policy and the Fed: Dissenters’ concerns about still-elevated inflation, and weekend chatter around potential future Fed leadership, add a layer of uncertainty to the otherwise supportive rate-cut narrative.

Outlook: what to watch next
- Near-term catalysts this week, according to preview coverage, include key economic releases and earnings from notable companies such as FedEx and Jabil. With the jobs report delayed and a key inflation print ahead, the next data points could validate or challenge the bond rally.
- Breadth and leadership: Watch whether small-caps (IWM) and cyclicals continue to participate alongside tech (QQQ), or if leadership re-narrows back to AI megacaps.
- Rates and the curve: Monitor whether the early-session bid in TLT and IEF holds through the day; a reversal would likely pressure precious metals and could test equity multiples.
- Energy complex: With USO and UNG softer at the open, see if dips attract buyers into year-end or if the commodity basket (DBC) remains flat-to-lower.
- Policy headlines: Cannabis rescheduling, health-care subsidy developments, and Fed commentary (including dissent rationales) are all potential volatility catalysts for affected groups.

Bottom line
Early trading sets a cautiously optimistic tone: broad indices are higher, sector participation is wide, bonds are firm, and gold and silver are finding support. The macro backdrop of anchored inflation expectations and a still-elevated—but drifting lower—rate structure is consistent with a soft landing narrative. At the same time, crosscurrents remain: AI leadership is being challenged by valuation and headline risk, policy uncertainty lingers inside the Fed and in Washington, and financing costs still matter for leveraged or deal-dependent stories. Into the final full week of the year, balanced positioning—recognizing both breadth improvement and the durability tests ahead—appears appropriate.