Stocks up as year winds down

With just three trading sessions left in 2025, the US stock market is positioned to close out the year on a bullish note.

The S&P 500 (SPX) climbed every day but Friday last week, hitting fresh all-time highs and posting a solid gain for the holiday-shortened week. A continued tech rebound helped the rally, but the materials sector—specifically, metals & mining—was the real driver, tracking the record-setting runs in gold and silver prices:

The headline: Santa delivers holiday rally.

The fine print: Gold hit a record high every day but one last week, while silver made it a clean sweep—and closed above $75 for the first time on Friday. For the year, gold is up 74% and silver is up 174%. Platinum didn’t hit an all-time high, but it outgained its fellow precious metals for the week with a 21.2% rally.

The number: 4.3%, the (delayed) Q3 GDP reading released last Tuesday—more than a percentage point above expectations.

The scorecard: The SPX led the market last week:

Sector returns:  The strongest S&P 500 sectors last week were materials (2.4%), tech (1.8%), and financials (1.7%). The weakest sectors were consumer staples (-0.1%), health care (1.1%), and energy (1.1%).

Stock moves: Hycroft Mining (HYMC) +49% to $24.52 and Adeia (ADEA) +31% to $16.67, both on Monday. Edgewise Therapeutics (EWTX) -18% to $20.94 on Monday, Canadian Solar (CSIQ) -12% to $23.93 on Tuesday.

Yields and the dollar: The 10-year US Treasury yield slipped 0.02% to 4.13% last week. The US Dollar Index (DXY) fell 0.58 to 98.02.

Futures: February gold (GCG6) rallied $146.69 to $4,4533.99 last week. Despite a sharp Friday sell-off, February WTI crude oil (CLG6) ended last week up $0.22 at $56.74.

It’s a light, holiday-shortened week—no earnings of note, and a sparse economic calendar:

●Monday: Pending Home Sales
●Tuesday: S&P Case-Shiller Home Price Index, FHFA House Price Index, FOMC minutes (December meeting)
●Wednesday: Chicago PMI
●Thursday: New Year's Day (markets closed)
●Friday: S&P Global Manufacturing PMI, construction spending

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

One of the more interesting stories of the second half of 2025 was the resurgence of US small-cap stocks. In early April, the Monthly Market Commentary noted Morgan Stanley & Co.’s research that small caps were trading at a 25% discount to large caps on a forward P/E basis, and that the last time that happened (in 2001), small caps outperformed large caps by 87% over the next decade.¹

The fortunes of small caps have shifted since then. The Russell 2000 (RUT) outperformed the SPX (and the NDX) in the second half of the year, and gained nearly twice as much as the SPX since August 1:

While the RUT’s underperformance over the past decade or so—especially since 2020—may appear to be a permanent condition of the US stock market to some investors, it certainly hasn’t always been this way. In fact, the current five-year run of annualized RUT underperformance vs. the SPX is the longest since 1994-1998.

The RUT outgained the SPX in 19 of the past 38 years, including 11 of 13 from 1999 through 2013—a period during which the small-cap index posted a net return of 175.8%, more than three times as much as the SPX’s 50.4%.

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¹ MorganStanley.com. MorganStanley.com. 2025—A Pivotal Year. 3/5/25.