As December rolls in and we trade pumpkins for peppermint, the markets brought a little early holiday cheer. After a mid-November stumble, stocks brushed themselves off and finished near record highs. The S&P 500 has now chalked up seven straight months of gains, a streak even Santa would admire.
Much of November’s strength came from rising confidence that the Federal Reserve is preparing to cut interest rates. Add a sturdier economic backdrop, strong corporate profits, and the steady drumbeat of artificial intelligence investment, and November wrapped itself like a neatly tied bow.
Heading into December, the job market becomes the background music of the season. As long as people keep working, they keep spending, and that helps keep the economy in holiday-shopping mode. We expect job growth to slow a touch but remain positive as new government data filters in. And early next year, about $130 billion in tax cuts from the One Big Beautiful Bill Act (OBBBA) will begin showing up in paychecks. Think of it as a slightly delayed stocking stuffer arriving in February 2026.
Meanwhile, corporate America is not just holding steady; it’s throwing its own version of a holiday open house. More than 82 percent of S&P 500 companies beat their earnings expectations in the third quarter, the best rate since 2009. Earnings grew 13 percent, marking four straight quarters of double-digit growth. Think of companies as hosts who managed to serve a full holiday spread and keep the kitchen spotless at the same time. They tightened expenses, boosted productivity, and generally navigated rising costs with surprising grace. Many even sounded upbeat about 2026, nudging analysts to raise next year’s forecasts.
As we inch toward 2026, a few market themes continue to twinkle in the distance. The Fed is widely expected to deliver a rate cut in December, though what happens after that depends on the data, the economic equivalent of waiting to see if the snowstorm actually shows up or fizzles into drizzle. AI investments will keep generating buzz, midterm election chatter will start rumbling like distant thunder, the U.S. dollar may do a little back-and-forth dance, and, as always, the world will toss in its share of geopolitical plot twists just to keep things interesting.
Given all of that, diversification becomes a helpful companion for the new year, the financial version of a warm coat that works with any outfit. Volatility will pop up here and there, much like an unexpected snow squall on a day you planned sunshine. It’s not always pleasant, but it’s part of the landscape, and those brief storms often leave behind clearer skies and a better view.
Wishing you a season filled with warmth, good company, and a few peaceful moments where the world slows down just long enough to feel magical. I’m especially thankful for all of my clients, those who have been with me for years and those who joined me more recently. Your trust means everything.
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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. All data is provided as of December 3, 2025. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All index data from FactSet. The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Past performance does not guarantee future results. Asset allocation does not ensure a profit or protect against a loss. This research material was prepared by LPL Financial, LLC. Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value